How much does it cost to raise a child from diapers through braces to high school graduation? According to MoneySense.ca, the average cost of raising a child to 18 years old is nearly $250K. And if you plan to financially support them during their years of post-secondary education, it will be even more costly.
To help encourage couples to have children and to help with the cost of raising a child, the government offers the Canada Child Benefit (CCB). If you’re a parent in receipt of or eligible for the CCB, there’s good news! The government is increasing the amount that parents can receive. Let’s take a closer look at the changes to the CCB and how parents can make the most of them.
Beginning in July 2019, the CCB is increasing. In case you’re a new parent and you’re not familiar with this benefit, the CCB is a tax-free financial boost for families.
Starting in July, the new annual maximum benefit is $6,639 for children under 6 years old and $5,602 per children ages 6 through 17. This adds up to an increase of about 3 percent from current rates or a few hundred bucks on a yearly basis, since 2016.1
But not everyone is eligible for the CCB. The more children you have, the more the CCB is reduced by. Likewise, if your family has a high income, you’ll likely receive nothing.
Does the CCB sound good so far? If you haven’t already applied and you’re eligible, you can register your child’s application through the CRA’s Automated Benefit Application. However, if you’re a parent who’s behind on your taxes, you’ll need to get caught up first before you’re eligible to start receiving the CCB.
If you’re eligible for the increase in the CCB, it’s a good idea to be proactive and make a plan for the extra money. That way, you’re more likely to make the most out of it.
A great use of the increase to the CCB is to contribute the extra money to your child’s RESP. A RESP allows you to proactively save for your child’s post-secondary education. Not only does the money you contribute to an RESP grow tax-free, you’re also eligible for a grant of up to 20 percent of whatever you contribute up to a maximum of $500 per year or $7,200 over your child’s lifetime. (And if your family has a qualifying low-income, you may be eligible for the Canada Learning Bond. That means up to an extra $2,000 in your family’s pockets over the lifetime of your child’s RESP.)
The easiest way to up the contribution to your child’s RESP is to increase the monthly amount you’re already contributing. If you can increase the contribution amount by $25, $30 or even $50, it can go a long way in providing a brighter financial future for your child!