Balancing baby and a house

DIANNE MALEY | Globe and Mail | Published Friday, Jun. 18, 2010

We asked Jason Heath, a financial planner with E.E.S. Financial Services Ltd. in Markham, Ont., to look at this young couple’s situation.

What the Expert Says

Gretchen and Bram are saving about $675 a month outside of their company savings and pension plans, Mr. Heath notes. If they plan to have children, the cost of diapers, clothing, education savings, child care and children’s activities “will put them in a negative cash flow scenario,” he says. Daycare costs alone could be well over $1,000 a month.

Their plan to buy a house would mean taking on a mortgage, although a house with a rental unit would help offset the higher costs.

“They might be wise to focus on budgeting and baby plans first,” the planner says. “Babies don’t need much room at first, so assuming they are comfortable in their current condo, they could probably live there for a couple more years.”

Gretchen’s wish to go freelance (with potential downside risk to her income) and the couple’s desire to move into a house (a potential increase in their expenses), are a potentially bad combination.

“As a father of two young children, I can tell them from experience that it’s hard enough juggling parenthood without adding financial insecurity to the mix.” read full article