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New Baby, New Plan

It's impossible to put into words the feeling of welcoming a baby into your home and your heart. Whether your baby arrives the old fashioned way, from across the world, as a pleasant surprise or after years of waiting, when he, she or they come home, life begins in a whole new way.

It's no secret that children have many needs. And the financial ones seem to add up quickly. In fact, today you can safely expect to spend more than $160,000 from the day your child is born until he or she leaves the nest. That's no small investment. It's important to spend some time planning how to best use your finances to take care of both your child's needs and your own goals for the future.

Preparing for Arrival

Chances are, you're looking forward to taking a leave from work when your baby comes. You'll need to determine what your income will be while you're away and any additional monthly expenses you'll have in addition to day-to-day needs for your new family member.

Employment Insurance

If you've been contributing to Employment Insurance (EI), there are two benefits you may be eligible for. Together, they add up to the 50 weeks that we commonly think of as maternity leave. It's important to know the maximum amount you can receive is $485 before tax per week, which may be less income than you are used to.

  • Maternity benefits
    Mothers may be able to collect up to 15 weeks when giving birth.

  • Parental benefits
    EI also pays up to 35 weeks to parents who are caring for a newborn. After the first 15 weeks, one parent can take the full 35 weeks, or both parents can share them.

Contact EI to make sure that you meet the eligibility requirements.

The rules for parents who live in Quebec are different. Maternity, paternity, parental and adoption benefits are paid from the Quebec Parental Insurance Plan (QPIP). Types and amounts of benefits are different from those paid under EI. Learn more

Top Up

Your employer may provide additional "top-up" benefits. These replace the difference between your current salary and the amount received from EI benefits. They are often discussed as a percentage. For instance, you might have 90% top-up, which means your employer might top up your EI benefits to a total of 90% of your current salary for a period of time. Your HR department should be able to give you more details.

Other considerations at work:

While speaking with HR, you should also discuss what contributions to pension and benefit plans you might be responsible for while on leave. You should also consult a financial planner* to help you decide if it makes sense to continue your contributions while on maternity leave.


Adding to your family through adoption not only requires many of the same financial decisions as giving birth but there are important differences you need to be aware of.

EI Benefits

  • You won't be entitled to maternity benefits under EI, but the 35-week parental benefits are still available.
  • Under QPIP, adoption benefits may extend for either 28 or 37 weeks, depending on the level of benefit selected.

Tax Credits

  • The adoption expense tax credit from the federal government provides some relief to help offset expenses such as fees paid to licensed adoption agencies, court and legal expenses, reasonable travel and living expenses for the child and adoptive parents, translation fees, and mandatory fees paid to a foreign institution. This credit, which could reduce federal taxes by approximately $1,700, can be shared between both parents.

You'll need to look more closely at your insurance when you have your first child. Are you properly covered? It's important to understand how losing one partner or facing a sudden disability would affect the household finances. The lost income would need to be replaced in order to keep the family functioning during difficult times. It may be time to re-evaluate your current coverage.

Whether you stay at home, hire a nanny, or send your child to daycare, there's a cost involved.

Paid Childcare:

The cost of care varies dramatically depending on your location, the type of care you are looking for and the age of your child. It's important to research the cost of care available locally.

The Cost of Staying Home:

You may need some help in analyzing the cost of one parent staying at home for an extended period. For instance, there are tax implications once you have a child. For example, the sole income earner will now be able to claim a tax credit both for the non-working spouse and for the child, which could reduce his or her tax bill significantly.

Available Child Care Benefits:

Regardless of the type of care, all families are entitled to the Universal Child Care Benefit (UCCB), a monthly benefit of $100 for each child under age 6. Lower and middle income parents of children under 18 will also be entitled to at least some monthly payment from the Canada Child Tax Benefit (CCTB). Your financial planner can review these benefits with you and explain how to apply for them.

Growing your family is an exciting time but it can also be overwhelming to wrap your head around the financial implications that come with bringing a new baby home. Click the Education Savings calculator now to start researching how much you'll need to save for your child's education. And if you're wondering if you've financially prepared for maternity leave and beyond, click the Major Purchase calculator for a simple way to assess if you're saving enough to achieve your goal on time.

Let's talk. Call a BMO Financial Planner* today at


* BMO financial planner refers to Financial Planners, Investment and Retirement Planning that are representatives of BMO Investments Inc., a financial services firm and separate entity from Bank of Montreal.

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