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Partnering up and settling down

Creating the financial foundation for a well-lived life together. 

This is the second in a series of articles devoted to planning for the financial challenges and opportunities that can arise throughout different stages of life. The first – “Starting out and moving up” – is available here

Along with managing a career, paying bills and attending to other adult responsibilities, most people choose to enjoy some of life’s pleasures in the company of a romantic partner. In many cases, this becomes the foundation for a marriage or other type of long-term partnership – and the promise of building a future together.  

Hosting a wedding, buying a home and raising a family may appear on a couple’s long list of dreams. But achieving those dreams may take time and a significant amount of money. Approaching them with the aid of a detailed financial plan can help make those dreams come true. 

Just (or almost) married

Getting married is the beginning of an exciting journey – and a wedding can be one of the most festive and memorable events of a lifetime. Just how festive that wedding might be will largely depend on your tastes and budget. Since there aren’t any fixed limits to what a wedding should cost, be mindful of the inflated prices associated with a venue, food and entertainment, which can quickly add up. An initial plan to host a lavish affair might need to be pared down to help balance other financial priorities. 

Regardless of its size, the key to a successful event is to match the wedding plans with the budget and to be honest with each other when money issues arise. If talking about finances presents some communication challenges, this article offers some helpful insights. 

Of course, there are plenty of alternatives to throwing a big bash. In recent years, the number of couples who choose to elope has risen. This was especially true during the pandemic, when many wedding plans were sidelined due to health restrictions. Others elope to avoid adding unwanted stress and financial strain early in a marriage. 

The prevalence of common-law unions has risen as well. Even before the pandemic, between 2001 and 2016, the number of couples living in a common-law partnership rose 51.4 per cent, which is more than five times the increase in officially married couples over the same period.[1] While “traditional” marriages still outnumber common-law unions, the norms have changed. In 1961, 92 per cent of Canadian families were headed by “traditional” married couples, but by 2016, that number had declined to 66 per cent.[2] 

Although a wedding can be a rich source of happy memories, once you add up all the costs, spending wisely now could make a difference to your financial well-being long after the big day. At the very least, planning a wedding can be good practice for managing a marriage through the other life events and big decisions that are certain to come along. 

The more the merrier

If raising a family is in your plans, children will introduce a whole new financial reality. And if one or both parents intend to take some time away from work to care for the child at home, the household income is sure to decrease during that time. To help prepare for some expected financial changes, imagine how you and your partner will live with less income (at least for a little while). Experiment by living only on what you expect to bring in while one parent is on leave and direct the excess earnings to a child-raising fund or to reducing debt before there’s a drop in take-home pay. 

It’s comforting to know there are some workplace and government programs intended to reduce the impact on your finances of an extended absence from work. For example, the Canadian government’s Child Benefit program is designed to help parents absorb some of the financial challenges that come with raising a family. Some employers support young families by topping up government parental leave benefits. Make a point of contacting your employer’s human resources representative to learn more about taking a parental leave when you’re expecting a child. 

Whether or not you need to take advantage of programs that can help bridge the income divide, expecting a baby is a good reason to revisit the household budget. As well as immediate essentials like diapers, clothing and child-care costs, there’s also the future to consider. A bouncing baby will one day want to bounce from one fun activity to another, and swimming lessons, soccer league or kinder-gym classes will add an ongoing expense to your budget. One study claimed the average cost of raising a child from infancy to adulthood in Canada is more than $250,000 – and this figure doesn’t account for any future education costs.[3] 

Saving for school

One sizable expense that parents face is saving for their child’s post-secondary education. And even though high school graduation may seem a long way off, starting to save when the kids are still young can be a smart financial move. 

A variety of education savings and learning grants is available to Canadians, but perhaps the most popular strategy for covering the cost of higher education is to contribute to a Registered Education Savings Plan (RESP). You can begin making regular RESP contributions as soon as you have a social insurance number for your child. The federal government will match up to 20 per cent of your contributions, to a maximum of $500 per year and a lifetime maximum of $7,200 per child.[4] 

Anyone can open an RESP, including parents, grandparents, other relatives and friends. There are individual plans for a single beneficiary and family plans when there are multiple beneficiaries. But regardless of who saves the money, starting early can make the biggest difference in how much will be available when the kids are ready to start their post-secondary education. 

A place to grow

Plans for raising a family can impact the type of home you’ll want, and some serious decisions lie ahead. 

A home will likely be the biggest purchase you’ll ever make. To make it happen, most people will need a mortgage. Doing some research ahead of time will help when it comes time to apply for a mortgage. Consider speaking with your advisor first, for some professional insights into flexible terms and repayment strategies that you may have overlooked or not considered. This article can help you get a head start on determining which type of mortgage may be most suitable for your situation. Some additional information about home-buying during challenging times is available here

a couple drinking wine and eating pizza in their new home

Managing finances as a team

Couples with similar interests and aspirations take comfort in knowing they’re a team – working to provide for one another and to build the life they want. A household budget is the perfect tool to help determine how much to set aside for things like monthly expenses, debt repayments, savings and investments, an emergency fund and more. 

When you spend money, be sure to track it against your budget. Some easy online apps can do the calculations for you, hassle-free, in real time. 

Knowing exactly what you’re spending money on each month is helpful, especially in terms of less visible costs. Are your cellphone or home internet bills higher than you think they should be? Are any long-forgotten subscriptions to online providers draining away money? Do you eat lunch out every day instead of packing one to take to work? Conducting a lifestyle audit can help you discover where unnecessary expenses could simply be cut off. You may not have noticed what they have been costing you lately – but you will now. 

A good understanding of your expenses is especially important during periods of rising interest rates and inflation. Inflation is difficult to contend with because most people’s income can’t keep pace with rapid price increases. This can make managing your budget and saving money all the more challenging. 

Some financial institutions have been reinventing solutions to help customers manage cash flow. Keeping track of savings, debts and bill payments, investments, credit and the rest of your finances can be demanding. One reason some advanced banking products such as all-in-one accounts have gained popularity is because they help you manage your financial commitments conveniently. A single, flexible account makes it easier to see your saving and spending at any given moment. Consolidating accounts can also save you a surprising amount of money by offloading the service and maintenance fees associated with carrying multiple banking, credit, investment and mortgage accounts. 

If you find money is too tight even after sticking diligently to your budget, perhaps look at investing in your career or adopting a side gig that can help you earn more money and ease some of the pressure. 

When it comes to debt, prioritize paying off whatever is costing you the most in interest payments to free up money that can increase your savings or pay for other wants and needs. Another potential bonus is that tackling debt of any kind by making timely payments is like turbocharging your credit score

Insurance and investments

In your excitement to earn income, build wealth and perhaps start a family, don’t forget about insurance. Life, disability, critical illness and other forms of personal insurance are safeguards against the devastating effect of losing your ability to work, or worse, of dying when you have dependants who rely on your income. If insurance seems confusing or intimidating, it’s likely because you haven’t been properly introduced to the variety of policies that can provide decent, affordable protection. Consider starting by learning the basics and making sense of insurance plans that can provide a layer of income security and protection for your loved ones. Insurance has come a long way since your parents’ day. Some programs have gained popularity by offering incentives and rewarding you for embracing healthy habits. 

Just as marriage can be seen as an investment in mutual happiness, it can also work to your financial advantage. Two incomes will obviously make it easier to handle expenses, and to boost your investment portfolio. 

If you can, devote any amount of your income to your savings and investment (and retirement) accounts, allowing them to compound over time for added security in your post-working years. 

Investing in financial products, such as mutual funds, will usually include management, broker and/or service fees, among others. Depending on the product, some fees can add up to a sizable sum over several years. Being aware of them and the long-term costs of ownership is a subject to review with your advisor from time to time. Fees, like taxes, are a part of the investment process, but there are many instances when they can qualify for tax deductions. Check out this article, which shows how investment fees and taxes work and how they might affect you. 

Prepare for the journey

Young couples share many of the dreams and aspirations that their parents once did. They too encountered plenty of opportunities and challenges they probably never predicted. One difference is that today there are more resources like this personal and financial organizer worksheet that can help you and your partner prepare for many life events, whether just around the corner or farther down the road. Filling it out and speaking to your advisor about the results can help reveal the best strategies for achieving your short- and long-term financial goals. 

Life moves quickly! Being well prepared for the journey ahead can help make your time together all the more enjoyable. 


[1] www.thecanadianencyclopedia.ca/en/article/marriage-and-divorce

[2] Ibid.

[3] www.moneysense.ca/save/financial-planning/the-real-cost-of-raising-a-child

[4] www.canada.ca/en/services/benefits/education/education-savings/savings-grant/amount.html

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