The cost of kids: What you need to know about providing for children after divorce

 

Key takeaways

  • Raising a child can be expensive.

  • The best interest of the child should be the top priority.

  • Avoid extra costs by staying away from legal disputes.

 

After a divorce, budgeting for child-rearing can present new complications: there might be changes to parents’ incomes, more expenses managing two households, or greater transportation costs, just to name a few. It’s important that separated parents develop an action plan that is in the best interest of the children and keeps money disputes to a minimum.

 

So, how much does it cost to raise a child in Canada?

In 2011, Canadian personal finance magazine MoneySense set out to estimate the cost of raising a child from birth to age 18. With help from a demographic consultant, author Camille Cornell spent months poring through Statistics Canada surveys and other research and came up with final figures that shocked many people, including parents who had lived through the experience of raising at least one child.

Cornell’s estimate was a total of $243,600, or almost $13,000 a year. Calculating inflation costs, the magazine revisited the topic in 2015 and, adjusting for inflation, came up with a new estimate of $253,900, or about $13,300 a year. The magazine added that these totals do not include the cost of university or other post-secondary education. Costs of raising children can also vary widely depending on where you live in Canada.

Whatever the final figure is for your family, there is no lack of anecdotal evidence from many of the five million Canadians – four in ten with children – who have divorced or separated over the past 25 years that money matters are often a constant and contentious issue for divorced parents.

 

What’s in the best interest of the child?

The Federal Child Support guidelines established in 1997 have greatly reduced legal wrangling among parents and their lawyers over what constitutes a reasonable cost of child-rearing. Those costs are based mainly on the annual income of the non-custodial parent. Common-law parents also are subject to child support rules set down by the province or territory in which they reside. However, as both lawyers and counsellors will attest, the guidelines do not cover all situations, potentially leaving room for interpretation and contention regarding child support.

 

Consider a parenting plan

A parenting plan is a detailed, agreed-upon list of rules and guidelines for taking care of your children – everything from who takes them out on Halloween to laying out a schedule for where they will spend holiday and vacation time. It can also establish what activities each parent expects their children to pursue, from team sports to ballet lessons, and how those activities will be funded. Documenting these activities up front and reviewing annually can help both parents incorporate any unusual expenses into their budget planning and avoid unexpected surprises.

 

Avoid using the courts to resolve disputes

When disagreements arise between ex-spouses over child costs, the issue may seem unresolvable, so the two sides take the issue to court to have a judge decide it. The result can be that the very money the parents had sought to have fairly distributed ends up being used to pay lawyers’ fees and court costs.

As one expert put it, imagine if the $20,000 spent on legal costs were instead directed to funding some activity that directly benefited the child? Keeping the best interest of the child as a guiding principle during disputes may help avoid spending money on activities that do not directly benefit the child.

 


Sources:
Judith Wallerstein and Sandra Blakeslee, What About the Kids: Raising Your Children Before, During and After Divorce (New York: Hyperion Press, 2003).
Gail Vaz-Oxlade. Divorce: A Canadian Woman’s Guide (Pearson Education Canada, 2009).
Brette McWhorter Sember, How to Parent with Your Ex: For The Residential Parent (Naperville, IL: Sphinx Publishing, 2005).
Elizabeth Thayer and Jeffrey Zimmerman, The Co-Parenting Survival Guide; Letting Go of Conflict after a Difficult Divorce (Oakland, CA: New Harbinger Publications, 2001; distributed in Canada by Raincoast Books, Vancouver).
“The Real Cost of Raising Kids,” MoneySense Magazine, June 2011.
Mark Brown, “The Real Cost of Raising Kids: The updated figures may surprise you,” MoneySense.ca, April 15, 2015.

Read a fund’s or pool’s prospectus or offering memorandum and speak to an advisor before investing. Read our privacy policy. By using or logging in to this website, you consent to the use of cookies as described in our privacy policy.

This site is for persons in Canada only. Mutual funds and ETFs sponsored by Fidelity Investments Canada ULC are only qualified for sale in the provinces and territories of Canada.

32318-v2018715