My husband and I wheezed with laughter recently as I read aloud from an old personal journal I found from our BK years (Before Kids.)
“It haaaa! Says we whaaa…haaa! Went fff…for dinner every nnn…night of the week!” I said chortling. “Get this! We also ordered liqueurs and dessert.”
Such hedonism seems hilarious to us now.
It was comedic relief from a serious task that day. Cutting a $9,000 cheque for my eldest child’s first university semester. Our BK fun money now partly goes towards our kids’ RESP. It’s one of the many economic biggies my spouse and I planned for after we said “I do.”
If you’re newlywed or newly united common-law style, a joint budget plan is essential. Your partner may be your ideal mate but hearts can rapidly untwine when cheques bounce. Actually, financial discord is a major reason Canadian couples split.
Here are seven things to think about when linking finances:
1. Who gets the juiciest tax break? It’s usually most beneficial for the higher income earner to claim credits either of you can deduct. Contact the CRA to learn more about how to minimize your tax joint burden.
2. Plan for baby “start-up” costs if you want a child: Before your Mini You arrives, plan to stash about $2,500 for infant necessities (i.e. stroller, baby furniture, car seat) and expect to pay $300 per month for diapers and clothing.
If you adopt, the fees range hugely from absolutely nothing for foster child adoptions to $30,000 for foreign adoptions.
4. And for growing costs: You’ll pay about $3,000 annually per kid to feed, clothe and entertain them. Add about $12,000-$17,000 a year for daycare fees. Yikes!
But here’s great news, if you save merely $100 -$200 per month for each child in an RESP mutual fund plan from birth, you’ll easily afford post-secondary tuition for local educational institutions.
Savings accumulate fast in a RESP because the government adds twenty to forty per cent of what is in there as grant money for every contribution.
5. You’ll grow older, too: Wanting to travel in your sunset years? If you have the contribution room invest monthly in RRSPs and/or TFSAs and think about adding any annual work bonuses to realize this goal.
6. Get real about surreal estate: If you want to buy a home you’ll need to save about $35,000 to purchase a $500,000 property. This includes legal fees, high ratio insurance and a five percent down payment.
7. Are you planning for fun, too? Each couple differs on how much they like to eat out or travel but consider putting something aside for these expenses.
If you and your partner properly plan for your goals you’ll feel better about your spending habits, your future and potentially avoid a little drama.