Becoming a parent is a joyful, life-changing event. That said, in addition to diapers and lack of sleep, parents face various financial challenges as well as a significant change of lifestyle.
They must budget for new expenses, like buying a family car or paying for daycare, while dealing with a drop in salary during their parental leave.
To offset an anticipated lower income, you could save up money in a TFSAA TFSA is a “Tax-Free Savings Account.” It is a savings vehicle (like an RRSP) that allows deposited funds to grow tax-free. This money can be invested in shares, bonds, guaranteed investment certificates or other types of savings or investments.
Making contributions to a TFSA will not entitle you to any tax deductions. However, when you withdraw the money from the TFSA, you will not pay any taxes.
A TFSA lets you save for any reason you choose (buying a home, car, etc.). . Amounts invested could also be used for unexpected events. To help you keep track of your income and expenses, consult our budget tables.
What is the best insurance for you?
To ensure the financial security of your child in the event something unfortunate were to happen to you, you can choose from several types of life insurance, including term lifeTerm life insurance is life insurance that provides the beneficiary with coverage for a limited period. Term policies are generally renewable at prices set in advance that increase periodically., whole lifeWhole life insurance is life insurance that provides coverage until the death of the insured. Premiums are usually fixed for this type of insurance. This type of policy usually has a cash surrender value. or universalUniversal life insurance is life insurance that also includes a savings component. By paying a premium that is higher than the cost of insurance, the insured can save money tax free. However, a number of restrictions apply, and the insured may have to pay tax upon withdrawing the saved amounts.. Ask a representative for help to make an informed decision that suits your needs. Make sure the person is registered with the Autorité des marchés financiers.
Consider a Registered Education Savings Plan (RESP)
An RESP is a plan that allows you to save money toward financing post-secondary studies. The money you deposit in an RESP will grow tax free, and you could also benefit from government incentives that will help your savings grow more quickly.
In all cases, the contribution limit is $50,000 per beneficiary.