young girl opening a gift at her birthday party, in a back yard, as friends watch
Personal Finance

6 unexpected costs when having a baby

Financial experts weigh in on how to plan your budget around surprise expenses for new families

young girl opening a gift at her birthday party, in a back yard, as friends watch“[Birthday parties] catch a lot of people off-guard,” says Rona Birenbaum, CFP and founder of Caring for Clients. “20 times 20 is a heck of a lot of money. It’s $400 that you might not have budgeted for.” (Getty Images/PhotoAlto/Sigrid Olsson)

Having a baby is expensive. It’s estimated that, in Canada, a child will cost you between $10,000 and $15,000 a year until they turn 18. Couple that with recent RBC Economic Research that found women aged 25 to 34 face a 48 per cent income loss in the first year after having a child (while on parental leave). [See Can Canadians afford the new parental leave options?]

We asked a few financial-planning experts to weigh in on the unexpected costs of child rearing and how parents can plan their budgets around them. 


As a sleep-deprived, caffeine-infused new parent, whipping out the credit card happens easily, cautions personal finance expert Barry Choi, known for his blog Money We Have. These costly activities range from ordering in food too often to splurging on that product that promises to stop colicky cries.

“Being a new parent messes with you,” says Choi. “You think you are going to be smart with your money, but when your child comes and is non-stop crying, you do stupid things with your money.” 

If you do get caught up in careless spending, adds Choi, take comfort in the fact that you have likely cut back on expenses—such as nights out on the town—since having the baby, leaving yourself some room to splurge on conveniences.

“The good thing is, when you have a new child, the odds of you going out to the movies, and dinner are probably less frequent, so it balances it out to an extent,” he says. “But at the same time, for some families, it’s a real struggle because you are going down to one income.” 


If you don’t have a will or life insurance, now is the time to get them, advises Rona Birenbaum, CFP and founder of Caring for Clients. You never know what emergency life will throw your way, so protecting your dependents should be a priority. According to a 2018 Angus Reid Institute poll, half of Canadians (51 per cent) don’t have a last will and testament in place, with 25 per cent saying they are too young to worry about it, 23 per cent saying they don’t have the assets to warrant it, and 18 per cent saying it’s too expensive of an investment. 

“The moment you have financial dependents, life insurance becomes something that is a responsible thing to do as a parent,” says Birenbaum. “A lot of people just don’t think about it and don’t budget for it.”

Wills vary in price, depending on whether you choose to invest in a will on its own, or in a full estate plan. Life insurance costs also vary depending on your age, lifestyle and health condition. Factor these expenses into your budget. 


Beyond making sure you’re on daycare waitlists and are, at least, mentally prepared for that hefty investment down the line, there are also extracurricular activities to think about. 

You’ll likely feel the pressure to join in as other parents around you enroll their little tykes in music classes, guardian swimming lessons and soccer. According to a 2018 Ipsos survey for Global News, 55 per cent of Canadian parents agreed that the cost of their kids’ activities puts a strain on family finances, with 32 per cent saying they are using debt to fund extracurricular activities. Money expert Jessica Moorhouse reminds new parents to revisit their family budget regularly to add these new expenses, perhaps finding new ways to save, rather than entering the debt cycle. 

“It’s difficult to plan for because you don’t know what to expect,” she says. “Lots of people will just use their credit card or line of credit…but wouldn’t you rather over save and have cash? You don’t want to start your new journey of being a parent by getting into debt.” 


You may need someone to watch your baby for a couple of hours, but this can cost a pretty penny if you don’t have free childcare. Factor in the cost of a babysitter—which can be as high as $17 per hour, according to—and an evening out for dinner and a movie proves expensive. 

On the bright side, as Choi mentioned above, you likely haven’t been out in months, so overall entertainment costs have gone down, and heading home early to relieve the babysitter, keeps costs down as well.


Party invites for kids start as early the first birthday, particularly if you belong to a parents’ group. It only continues as your child moves into daycare, preschool, kindergarten, and so on. Twenty presents later at $20 a pop and kids’ birthday parties now have their own line item in the budget.

“[Birthday parties] catch a lot of people off-guard,” says Birenbaum. “20 times 20 is a heck of a lot of money. It’s $400 that you might not have budgeted for.”

Plus, you will also have added expenses when it’s time to celebrate your child’s birthday, with 20 birthday invitations to send out, buying pizza for kids and their parents, and 20 loot bags to put together. So, adjust your budget accordingly.


You thought that one-bedroom rental would be big enough for the three of you. They’re called “little ones” for a reason, right? All of sudden, you’ve outgrown your living space with cribs, change tables, strollers, toy bins and tantrums taking over. It’s time to move. 

This will overhaul your budget, particularly if you are graduating from renter to homeowner, says Moorhouse. Added expenses include moving costs, mortgage and home insurance, property tax and additional utility bills.

“New parents think that the place they are living in is totally fine,” says Moorhouse. “Then they realize their neighbours are very loud, there are stairs and no elevator…and they need to move. Now they are new homeowners on top of being new parents.”


Check out CPA Canada’s financial literacy guide: Babie$: The real story of how much they cost. To learn more about estate planning, CPA Canada’s financial literacy session, Estate planning: Learn how to create a plan to distribute assets, during life or upon death, can provide more insight.