Cost Of Having A Baby In Canada

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Cost Of Having A Baby In Canada

Having a baby is perhaps the most exciting time in a person’s life. But along with all that exhilaration comes a hefty price tag of having and bringing up a baby. The expenses go far beyond just buying a stroller, crib, and a few packs of diapers, it also includes future expenses like education. Understanding all these costs can help you plan for the future and make sure you’re financially prepared to take this exciting step. 

How Much Does It Cost To Give Birth In Canada?

In Canada, childbirth is relatively affordable compared to other countries. In general, Canadians and permanent residents can expect costs to be anywhere between zero and a few hundred dollars if they opt for a private room. These services are affordable in Canada due to our universal health insurance program called Medicare

If you’re a tourist or non-resident, childbirth can be very expensive in Canada because you won’t have access to the Medicare program. However, if you have your own private international health insurance, you could potentially cover the costs. Depending on the method of delivery childbirth can range in costs as follows: 

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Covered By MedicareNo Insurance
Natural birth$0 – $1,000$5,000 – $8,000
C-section$0 – $1,000$10,000 – $12,000
Midwife$860 – $2,500$2,500
Source: wise.com

Cost Of Raising A Baby In Canada

According to the CPA, it is estimated that having a child will cost Canadian parents anywhere from $10,000 to $15,000 per year until the child turns 18 years of age. That adds up to $180,000 to $270,000 for each child. So, why does it cost so much to raise a child in Canada? What exactly goes into the overall cost of raising a child?

Costs Over The First Year Of Raising A Baby In Canada

On average, new parents spend the most during the first three years of caring for their baby. According to a report by Global News, the average annual cost for the first year falls shy of $25,000 whereas years two and three range around $20,000. After that costs remain fairly stable, averaging around $13,684/year. The following table includes some of the more common expenses associated with having and caring for a baby over the first year.

Baby Items To Budget For During the First Year

Crib$200 – $600+
Bassinet$60 – $600+
Change table$100 – $400+
Stroller$120 – $1,000+
Car Seat$90 – $500+
Baby Clothes$200+
Diapers$50/month+
Baby Formula$9/tin+
Baby Bottles$10+

These costs are just the basic necessities. There are plenty of other items that you may want to get for yourself and your baby, such as a nursing bra, breast pump, play toys, diaper bag, teething rings, and so forth. You can expect to spend anywhere from $1,000 to $5,000+ for these items, depending on how much you decide to get and how high-end you choose to go.

And don’t forget about childcare, if that applies to you. While many Canadian parents will stay home for a full year after giving birth to care for their child, some may feel the need to go back to work before the first 12 months are up. Even if they don’t, they will still likely experience a significant drop in income over the first year after having a baby while on parental leave to stay home and care for their child, according to RBC Economic Research.

The Cost of Raising a Child in Canada

The Cost Of Full-Time Childcare Across Canada

In 2018, the national average cost of child care was estimated to be $10,000 a year. That’s the equivalent of the yearly tuition fees many university students pay in Canada. Currently, Toronto and Mississauga are the most expensive cities, with monthly costs averaging 1,404 and 1,334, respectively. The most affordable cities were all in Quebec including Montreal ($175), Quebec City ($190) and Longueuil ($190). Outside of Quebec, Winnipeg, Manitoba ($524) and Charlottetown ($647) were the next most affordable. 

Full-Time Child Care Costs Per Month 

City InfantToddlerPreschool
Calgary (AB)1,1001,0301,015
Vancouver (BC)1,4001,4071,000
Toronto (ON)1,6851,3671,404
Montreal (QC)$175$175$175
Charlottetown (PEI)$738$608$586
Halifax (NS)$967$870$835
Saint John (NB)$868$716$694
Saskatoon (SK)$900$790$730
St.John’s (NF)$977$726$760
Winnipeg (MB)$651$451$451
Source: Average Child Care Fees In Canada 2018 – CTV News

Types Of Childcare Arrangements

There are many types of childcare options in Canada. While most childcare centres must be licensed, there are a few options that are unregulated. 

  • Regulated Childcare Options – This typically includes daycares, school daycares, afterschool programs, camps, and other similar services. All these forms of childcare are licensed and regulated in Canada.
  • Unregulated Childcare Options – If you have a private babysitter, a friend or a family member who takes care of your child, these are unregulated forms of childcare. With these options, you personally need to ensure that the person caring for your child is a responsible and trustworthy person. 

Saving For Post-Secondary Education

The above items have to do with providing your child with the necessities of life, as well as making your life as a parent a little more comfortable. But there are plenty of other expenses to come after the first year. Have you considered the possibility that your child may eventually want to attend college or university? If so, you can add another few thousand dollars to the tally. 

Post-secondary education is extremely expensive these days. Children born in 2021 can expect to pay $64,659 for a 4-year program without residence when they eventually head off to school. And that’s just an estimate based on today’s standards. 

While your child can always apply for a student loan to help pay their way through college, you may want to help them out financially. And a great way to do that is to set up a Registered Education Savings Plan (RESP)

What’s An RESP?

This program was created by the Canadian government to encourage parents to start saving for their children’s education. The government will top up your contributions until your child turns 18. 

More specifically, the government will match 20% of the first $2,500 contributed every year through the Canada Education Savings Grant (CESG), up to a maximum of $7,200 per child.

If you choose to go this route, the best time to start saving is when your baby is still an infant. Much like saving for retirement, it’s always best to start as early as possible to give yourself as much time as you need to grow your money. 

Plus, any interest earned on the contributions is tax-free; however, it will be taxed when it is withdrawn. But since students typically earn little to no income, the money won’t be taxed at a high rate.

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Other Savings Plans For Your Child

In addition to an RESP, there are other financial plans you may want to look into to help your child get a head start in life, financially speaking. 

TFSA

A tax-free savings account (TFSA) allows parents to save money and allows it to grow through interest. Any interest earned is not taxed, even when it is withdrawn. This type of savings account is a great way to save for your child’s future while allowing the capital deposited to grow tax-free. 

High-Interest Savings Account

As the name suggests, a high-interest savings account offers a higher interest rate compared to a regular savings account. 

Non-Registered Accounts 

A non-registered account is a type of flexible investment account that allows you to withdraw money at any time without being subject to an early withdrawal fee, which is the case with most other types of investments. However, when the funds are withdrawn from this open type of investment account, they are subject to taxation. 

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Trust Fund

A trust account is a legal relationship whereby the legal title to the funds is given to an individual or legal entity to hold, manage, and protect the funds until the child is old enough to withdraw the money.

Life Insurance 

This isn’t necessarily a traditional way to save for your child’s future, but it can prove to be extremely helpful if you pass away long before your children are old enough to care for themselves. With a life insurance policy in place, a lump sum of money will be paid out of your children — or anyone else that you name as a beneficiary — to help them cover ongoing costs in life. 

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Tax Benefits For Parents

There are numerous federal and provincial tax benefits available to parents in Canada. Depending on the one you apply for, the benefit may be in the form of a tax credit or tax deduction. But rest assured, both can be used to help you cover the cost of your child’s expenses. Some of the most well known are the Canada Child Benefit and the Child Disability Benefit

Benefit
Canada Child Benefit (CCB)The Canada Child Benefit is a tax-free benefit that is administered by the CRA. It provides financial aid to those with children under the age of 18. Depending on the age of your child and your level of income, the amount you receive will vary. However, in general, the maximum you can get per child is – $480.41 per month if the child is between the age of 6 to 17- $569.41 per month if the child is under 6 years old
Child Disability Benefit (CDB)The Child Disability Benefit is a tax-free benefit that is paid out monthly. Parents with children that have a disability can get up to $240.50 per month. However, the amount you get depends on the parent’s income and the child’s level of impairment.  

Looking for more benefits for parents? Check out these tax considerations for parents

Maternity Leave For Moms And Dads In Canada

Maternity Benefits

In Canada, only the individual giving birth can apply for maternity leave. If you’re unable to work due to pregnancy or you’ve recently given birth, you can apply for maternity leave. You can also apply for maternity benefits if you cannot work because you need to care for your newly adopted child or newborn. Through it, you can get up to 55% of your earnings, up to a maximum of $595 a week for 15 weeks.

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Parental Benefits

Parental Benefits are available to both parents. Parents can choose to apply for this benefit together or one after the other. There are two types of parental benefits: 

Standard

If you apply for the standard Parental benefits, you can continue to receive financial support at the same rate as the maternity benefits. That is, 55% of your earnings up to $595 per week. However, unlike the maternity benefits, you can receive these benefits for up to 40 weeks, so long as one parent doesn’t receive more than 35 weeks of the benefit. 

Extended

Similar to the standard parental benefits, you can continue to receive financial support, but at a much lower rate. With the Extended Parental benefit, you can receive up to 33% of your earnings up to $357 a week. You can enjoy these benefits for up to 69 weeks, so long as one parent doesn’t receive more than 61 weeks of the benefit. 

FAQs By New Parents

How long do new moms have to stay in the hospital?

The amount of time you’ll need to stay at the hospital after birth depends on the health of your baby and yourself. For example, if you had a healthy baby at the end of your term, then you should be able to go home within 24-49 hours. However, if your baby is born prematurely or you had a C-section, you may require additional time at the hospital to ensure you and your baby are healthy enough to go home. 

How do I choose which hospital to give birth in?

When choosing which hospital to give birth to, it’s best to consider the distance and care facilities it offers. The closer the hospital the faster you can reach it when your water breaks. Similarly, if you’re looking for certain comforts like private rooms, you can check with each hospital to see if those options are available. 

How long is maternity leave in Canada?

Mothers (the person who gives birth) can receive EI maternity benefits for a maximum of 15 weeks. You can receive up to 55% of your weekly income, with a cap of 595 a week. After you’ve exhausted your EI maternity benefits, you can apply for parental benefits, which come in two forms: standard parental and extended parental. 

Do I have to name my baby right away?

Depending on the province you live in, you can wait a certain number of days before having to register your baby. The Newborn Registration Service is used to register your baby and provide it with a birth certificate and SIN number. The name you choose when completing this will be considered your baby’s name and will be reflected accordingly on its birth certificate and SIN.

Can I give birth in Canada if I’m not a resident?

Yes, non-residents can give birth in Canada, however, if you don’t have your own private insurance, it can cost you between $5,000 – $12,000. Babies born in Canada by non-residents, automatically become Canadian citizens based on the principle of  “jus soli.”

Final Thoughts

Bringing a child into this world is life-changing, in more ways than one. While you certainly want to enjoy every moment with your baby, you also want to make sure you’ve budgeted accordingly, since having a child is an expensive endeavour. And while you’re at it, you may also want to take steps to start saving for your child’s future. Luckily, there are several ways to do that. Consider speaking with a financial advisor to consider all your options. 

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