Being a new parent is one of life’s most rewarding milestones, but it is also one of the toughest. The 2018 Federal Budget came with a host of changes that tries to lighten this load. One of these changes is an additional five-week incentive for new parents in two-parent families to take parental leave and share the responsibilities of caring for a new baby.

This new ‘use it or lose it’ benefit recognizes the role that raising a child is a two-person job (at the very least!) and is designed to give new parents greater flexibility. The new benefits make it easier for a new mother to transition back to work, for example.

A closer look at the new parental leave benefits

The new Employment Insurance Parental Sharing Benefit will come into effect in June 2019 and extends to adoptive and same-sex parents. Let’s take a closer look: the new benefit will increase EI parental leave to a maximum of 40 weeks in cases where the second parent elects to take (at least) five weeks off. That stands in contrast to the 35 weeks available today. If a parent wishes to take longer, the benefit will cover 55% of the second parent's income for up to 12 months.

If a family chooses to take the ‘extended’ parental leave scenario of 18 months, the second parent would be able to take as much as eight weeks of additional parental leave when the new benefits take effect.

You’ll get no shortage of child-related advice. But what about financial advice?

These benefits give parents a meaningful new option to bond with their child and more time and flexibility to plan for childcare. However, making the decision to take advantage of them depends on a family’s financial situation, goals and the stage and nature of each parent’s career.

The early years of having a child can be among the most expensive for your family. And the financial impact of child-rearing isn’t always top of mind when one is in the middle of a 4 a.m. feeding or diaper change. That’s why it’s important to work with your financial advisor ahead of time to determine the opportunity costs of going on leave.

• I can work with you to answer important questions like:
• Am I able to afford this extra leave? How can I keep my investment and retirement goals on track?
• How should I maximize my RRSP and/or TFSA during, before and after my child is born?

As your Advisor, I can help you answer these questions and work with you to see how your family can take advantage of the federal government’s new benefits in light of your larger wealth plan and retirement goals. Too often, parents overlook the short- and long-term impact of their leave.

If you’re planning on having a child – or have one on the way – plan to have these conversations well in advance of your due date. This will help to make sure you’re as prepared as possible and know the holistic financial implications of your family’s leave.

Of course, the conversation doesn’t stop there. With a child as part of your family, our conversations will extend from saving for parental leave to RESPs, and all the way to estate planning as you start thinking about leaving a legacy for your child.

If you have a new child on the way, now is an ideal time to call our office to chat about the future.