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Author Topic: The price of motherhood  (Read 3160 times)

Offline CareDC

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The price of motherhood
« on: May 24, 2009, 12:53:34 PM »
Families need to plan early to finance having children, but real change needed on policy level

RAISING children is not without its obvious sacrifices. But women often end up giving up much more than men, especially when it comes to their careers.

A recent press release from Investors Group cited some Statistics Canada facts and figures in this regard.

Women who choose to have children often earn less than their childless counterparts, and the more children they have, the less they can expect to earn in their careers.

To put it bluntly, the release stated women are economically penalized for being mothers.

"I call it taking one for the team," says Lisa Macdonald, a mother of two young children who works part-time as a financial adviser for a small Winnipeg firm.

The first step is to start planning as soon as possible, even if children won't be in the picture for some time, says Van Cauwenberghe, a planner with Investors Group.

"They need to start planning earlier and try to put away smaller amounts over a longer period of time to try to take advantage of the benefits of compounding," she says.

That process has become easier than in past years, thanks to the creation of the tax-free savings account (TFSA), which lets couples set aside as much as $5,000 annualy in an account where it can grow tax-free.

"If you are not earning very much money, a tax-free savings account is much better than an RRSP, because with an RRSP, you get a tax deduction," she says. "But if you're not earning any income, the tax deduction isn't worth that much -- not to mention the fact that when you withdraw later from an RRSP, you have to pay tax on it at that point."

A number of tax incentives also are available that can help reduce some of the costs.

The new child tax credit allows claims of up to $1,000 per child under 18 years of age every year. In real savings, that amounts to a little more than $300 per child.

The universal child care benefit provides families with $100 a month per child under six years old. The lowest income earner can also claim up to $7,000 in yearly expenses for child-care per child under seven and $4,000 per child between seven and 16.


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