A middle-income Canadian family spends about $293,000 to raise one child to age 17. Tuition isn’t in that figure, and neither is the income you lose when you step back from work. Employees have payroll, benefits, and paid leave to cushion all three. When you own the business, you don’t have that luxury. That’s why it’s vital to be clear about a few things before the baby arrives.
Decide Where Your Child’s Education Fund Should Go
There are a number of options, and starting a Registered Education Savings Plan is probably the most popular. A RESP is a savings account for a child’s education after high school, and the federal government pays grants into it on top of whatever you put in. However, you can’t open one until your child exists and has a Social Insurance Number. You can absolutely decide in advance where that money will go and how much you’ll send it every month.
The timing matters a lot here. Canadian undergraduates pay $7,734 a year on average, and that’s tuition alone, before rent, food, or textbooks. The federal Canada Education Savings Grant, or CESG, adds 20% on the first $2,500 you contribute each year, up to $500 annually and $7200 per child over their lifetime. You can carry unused grant room forward, but the catch-up tops out at $1,000 of grant per year, and eligibility ends December 31 of the year your child turns 17. Start at age 10 and the full $7,200 is mathematically out of reach.
Use the quiet months to shortlist providers. When you shortlist the best RESP provider in Canada for your situation, ask about three things: whether contributions can flex with a lumpy self-employed income, whether the provider applies for the CESG and the Canada Learning Bond on your behalf, and what happens if you need to pause deposits during a slow quarter.
Know How to Pay Yourself Through a Bad Quarter
A slow quarter and a newborn can arrive in the same month. You should aim for six to 12 months of personal expenses held in your own name, in a separate account from your business operating cash. This is not the float you use to cover payroll or a supplier invoice; it should be money you could live on if the business earned nothing for half a year. Rent, groceries, insurance, debt payments, and roughly $1,000 a month in new baby costs. Write the real number down.
Register for EI Special Benefits Early
This one has a hard deadline most founders miss. Self-employed Canadians can opt into Employment Insurance special benefits, but you have to wait 12 months from your registration date before you can claim maternity, parental, or sickness benefits. Register in March, and you’re covered the following March, not before.
You pay premiums on your self-employed income whether you claim or not, and it never covers a business downturn. However, 15 weeks of maternity benefits plus 35 weeks of standard parental benefits is real money during the months you’ll want to be at home. (In Quebec, maternity and parental leave run through the Quebec Parental Insurance Plan instead). Pick one this week. You can register for EI in about 20 minutes, and it starts a click you can’t shorten later.
Endnote
Babies arrive on their own schedule, but if you want to manage your family and business well, you have to make your money decisions early. Pick one item this month and put a date on it. You can spend an evening on it now. With a newborn asleep on your chest, the same choice costs a great deal more.
