New survey says rising child-rearing costs push Canadian families to raid savings and take on debt
Parents are so focused on giving their kids every possible advantage that two-thirds say they have, or would, sacrifice their own financial future to do it.
According to the RBC Family Finances Poll: Parenting Edition, 67 percent of respondents reported they have, or would, put their long-term finances at risk to spend more on their children today.
At the same time, 41 percent have dipped into savings or an emergency fund and 33 percent have taken on debt to cover family costs.
The pressure stems from both rising everyday expenses and mounting “extras” tied to raising children.
The poll, which surveyed parents of children up to age 17 about their day-to-day expenses earlier this year, found that 72 percent were caught by surprise by how much costs had increased over the past year.
Another 60 percent said their household budget has never been stretched so thin, and 52 percent admitted they had never been so stressed about covering these expenses.
Almost all respondents (94 percent) said they are concerned about these costs rising even higher in the new year.
Financial strain shows up directly in how parents spend on their children.
More than half (56 percent) said their budget is too tight to afford what they want for their children, while almost half (45 percent) felt pressured to buy more than they can afford.
That tension often intensifies around the holiday season, when expectations and spending collide with already tight budgets.
“Trying to balance needs versus wants for your children can be even more challenging during the holiday season, especially when you're finding it difficult to cover everyday costs throughout the year,” said Dawn Tam, BC-based senior manager, Regional Financial Planning Consultant, RBC Financial Planning.
She noted that talking to an advisor about finances can help parents manage trade-offs “so holiday spending doesn't get out of hand.”
Beyond seasonal pressures, annual extras can quietly undermine household finances.
Parents face recurring costs for school supplies and field trips; extracurricular sports, music, dance, arts and crafts and art activities; along with March Break and summer camps.
Tam said “parents often underestimate how much extras add up over the year,” putting unexpected pressure on family finances as smaller costs accumulate into hundreds of dollars and larger expenses climb into the thousands.
Tam, who is also a parent of young children, said the desire to give kids every advantage is understandable, but she flagged a clear risk: “The red flag we raise here when advising our clients is to make sure the choices they're making won't cripple their current – or future – finances.”
She added that the situation is even more difficult for those raising children alone.
“Trying to manage today's high costs in a single income household can be so much more challenging – let alone trying to save for the future they're hoping to achieve, for themselves and their children,” Tam said.
She noted that advisors can often help both single parents and couples “uncover hidden opportunities to stretch their budgets further and make the most of their cash flow.”
