Debt Detour: Why it’s Harder to Cope When You Have KidsOct 14, 2018
Clothing, food, extracurricular activities, childcare, tech…it’s no wonder parents are in debt. Raising kids can be expensive no matter where you live, but in the GTA, it’s especially costly. According to the BDO Canada Affordability Index, Canadian parents are much more likely to feel overwhelmed by their debt than their childless counterparts. The question is, what can be done about it?
What’s affordable and what’s not?
Is your family feeling overwhelmed by expenses? More and more Canadian families are feeling the same.
Canadians with children are more likely to struggle to afford groceries, utilities, clothing, transportation costs, vs those with no children.
32 per cent of Canadians with kids at home have delayed paying off credit card debt over the past two years because they could not afford it — higher than the Canadian average of 27 per cent.
34 per cent of Canadian parents told us they’re overwhelmed by their debt, vs 20 per cent of Canadians with no children.
Owning a home or condo in the GTA also means high mortgage costs and everyday expenses. Not to mention the high cost of childcare, children’s activities and basic essentials. As all these expenses add up, many families turn to credit to fill in the gaps, making it harder to save and get ahead.
4 ways to get past the debt barrier
If high costs and heavy debt have stunted your progress, there are steps you can take to alleviate the stress.
- Reduce your expenses. There are obviously fixed costs that you can’t change so let’s focus on what you can. Speak with your family about wants vs needs and how to recognize the difference. From there, brainstorm ways to save such as:
- Groceries: buy in bulk, use a coupon app, shop in season, and cook large batches of food that can stretch a few meals to save in this category. Check out more tips here.
- Entertainment: look at how much you’re spending on dining, shows or events each month. Don’t cut out all the fun, but cut down as much as you can.
- Extracurricular activities: after-school sports can be expensive. Look for a cheaper option through Parks & Rec or see if your kids qualify for a subsidized sports through Canadian Tire’s Jumpstart program.
- Rework your budget. Over the summer, the budget can get pushed aside. Fall is a great time to reacquaint yourself with your goals and get back into a budget routine. Use an app to help or a visual worksheet you can refer to regularly.
- Pay off debt. Using credit card or lines of credit to extend your income can keep you caught in a debt cycle. Use a debt calculator to see how much you owe and make a plan to pay it off. You can speak to a debt professional such as a Licensed Insolvency Trustee or, compare your debt relief options with this online tool.
- Plan ahead. Being on top of your budget also means setting aside money for upcoming events so you won’t need to turn to debt. Spending season is a few short months away. Plan ahead by adding up how much you spent last year on the holidays, a winter getaway or any other recurring costs and start setting aside money now from each paycheque.
Why debt relief is especially important for parents
As a parent, you’re often thinking long term as well as dealing with what’s happening in the present. That includes your child’s post-secondary education, your own retirement, and all the other life goals along the way.
By leaving debt balances unpaid now, you’ll reduce the amount of money you could be saving for these future goals. Dealing with debt, before it becomes a problem will allow you to utilize more solutions and get back on track faster.