Get a bunch of parents together, and you can pretty much guarantee that the topic of child care will come up sooner or later. It’s an issue that has many facets – waiting lists, institutionalized care versus home care, the pros and cons of au pairs, and the feelings of guilt that often accompany the decision to hand your child over to a stranger. It is easily one of the biggest sources of stress and concern for young parents.
A couple of days ago, I thought I’d do a quick estimate of how much we’ve spent on child care over the past few years. After scribbling some notes on a scrap of paper, I arrived at the figure of $53,000 spent to date. I did a bit more scribbling, and pegged future daycare spending at an additional $33,000, for a grand total of $86,000.
I’m not complaining…much. We have been fortunate to get spaces at great daycares for the boys, with terrific caregivers and nice facilities. Over the past three years we’ve gotten used to the monthly payments, and I try not to think about it too much. No good can come from thinking of all the other things you could do with $86,000…
Consider the other big financial investment that many parents make for their kids – university. Financial institutions and the government try to put the fear of God into you that if you don’t start putting money in an RESP when your child is still in diapers, you won’t be able to afford a quality education. You’re given 18 years of interest and government grants to build up a nest egg that will see your son or daughter through a few years of school.
Compare this to daycare, which is comparable to the cost of tuition and other fees. Many parents have spent whatever savings they have on a down payment for a home, and then you usually take a pay cut while you’re at home during your child’s first year. So, you’re broke and stressed worrying about getting a space for your child, and then when one finally opens up, you get to scrape together $1,100 a month for the privilege.
Given that the Conservatives’ national daycare program consists of giving parents $100 a month ($60 after taxes) to offset the cost, I think we need to come up with a different strategy. I propose stealing a page from the RESP model and taking advantage of the miracle of compound interest.
Under my new RDSP (Registered Daycare Savings Plan), children would begin contributing monthly payments at the age of 12. Weekly allowances, money from paper routes and snow shoveling, and cash gifts from grandparents would be funneled into a tax-sheltered fund that would grow over time. Kids will watch in wonder as their meagre savings grow year after year, and they’ll delight in learning about Canada’s tax system.
Of course, 12 is only a suggestion based on national statistics. If your child looks like the mischievous type who may engage in risky behaviour down the road, you may want to consider opening an RDSP as soon as possible.
Adulthood – it’s closer than you think.