# How expensive are kids?



## Mintycake (Apr 13, 2009)

Hello

Contemplating starting a family here with my husband. Currently we are double income, but both of us feel pretty strongly about a parent at home. So really...how expensive are kids?

I have this debate with co-workers who are parents, and from the sound of things, they can be horrendously expensive. Though I remember growing up in a single income family and not wanting for anything. Mind you, my parents did not pay for things like my university education or a car, but I had food, clothing, and shelter, and I had piano lessons and ballet lessons.

We figure we're in a good spot right now. RRSPs are maxed out, we are mortgage free, and the only debt we have is investment loans that are not due for another 20 years.


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## michika (Apr 20, 2009)

I think the first step would probably to be decide on the lifestyle you'd want to live with your child(ren).

I know that my brother & sister-in-law, started out on a good financial path, and then had a few children, and now they are completely different people financially. People always want the best for their children, but sometimes I think they loose sight of the fact that best is not always equatable to the most expensive item/product/school/etc.


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## johnsazzr (Apr 20, 2009)

Mintycake said:


> Hello
> 
> Contemplating starting a family here with my husband. Currently we are double income, but both of us feel pretty strongly about a parent at home. So really...how expensive are kids?
> 
> ...


Just do it if you really want kids..I am as frugal as they come and the 2 youngest were babies, my wife stayed home and we lived on 40k/yr income with small mtg pmt and no other debt just fine.


Not the same situation now with 3 kids and 2 incomes. My teacher spouse took 1 yr mat leave and worked the 2nd ty only part time so our income was reduced quite a bit for 2 yrs, but we hardly noticed because we budgetted for it. And we would do it again...children can bring things to your life that money and financial security never will for many people...I also know people who do not ever plan to have kids and that is fine, just not for me.


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## CanadianCapitalist (Mar 31, 2009)

I took a stab at this question a few years back. To give you some background, we have twin 3-year old boys and one baby girl. Yes, the cost of diapers adds up quite fast and you'll know the real meaning of "liquid gold" when you purchase formula but we've found that the two biggest expenses by far for us have been daycare and the opportunity cost of Mom going on mat leave. Both are in the tens of thousands of dollars. And, of course, there is college savings but at least you can save for college over more than a decade.

*How much does it cost to have a baby?*


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## canabiz (Apr 4, 2009)

I read an interesting article the other day when the writer questions whether we should contribute to RESPs ? Tax benefits aside, his points are the Baby Boomers and the Gen X generations are typically on their own when it comes to post-secondary education. Getting OSAP (Ontario Student Assistance Program), part-time jobs, scholarships, bursaries...just to name a few of the many financial avenues available to students.

This will allow students to be more financially independent and resourceful instead of having everything handed to them on a silver platter.

His simple question was : Is RESP over-rated ? and you know what I think he made some very valid points.


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## Rickson9 (Apr 9, 2009)

http://www.ccsd.ca/factsheets/family/

You can scroll down to the section entitled, "The Costs Of Raising Children"

You can also go to Statistics Canada to dig over there. They have various data associated with the topic as well.


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## CanadianCapitalist (Mar 31, 2009)

canabiz said:


> This will allow students to be more financially independent and resourceful instead of having everything handed to them on a silver platter.
> 
> His simple question was : Is RESP over-rated ? and you know what I think he made some very valid points.


I don't think so. Even if you believe that kids should fund part of their education, a RESP might make sense. Just contribute, get the matching grants and allow it grow. When the time comes for kids to go to University, withdraw your contributions for your own use and give the grants plus growth to the kids. 

With their education only partly funded, it will allow the kids to be resourceful and financially independent.


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## Mintycake (Apr 13, 2009)

Thanks for everyone's responses! Our plan is to only have one child and stop there. That will allow us to stay in our small home (2 bedroom) and also reduce the cost of child care should I go back to work (but we are going to try to make it just on my husbands income until the child goes to school, and then I will work part time). The one scary variable is my husband is self employed - there are years where he makes more than me but years where he makes less. I also have benefits etc but we have decided I will be the one to stay home since I have no love for my job and he loves what he does.

We plan to fund RESPs to get the grant but that's it - anything over and above that for post secondary costs have to be paid by the kid - my husband and I paid for our own educations and we both managed to graduate debt free by working hard and being frugal.


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## FrugalTrader (Oct 13, 2008)

We have a one year old now which has been the best thing to happen to our family. Yes, babies can be a bit costly, but they are worth every penny!

I've written some articles for (potential) new parents that explain the costs ,various tax credits and government programs:


Newborn baby expenses
Shopping for a newborn - the list
Shopping for a newborn - summary and tips
After the baby is born
Tax Credits and other perks - spousal amount, cctb, uccb


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## lb71 (Apr 3, 2009)

First thing to consider is your spending habits. You double income allowed for a certain lifestyle. Once that second income is gone, you have to realize that you cannon just buy anything at will. You'll also have extra expenses with the baby. The good thing is you are mortgage free.

If you lose your benefits, make sure you and your husband buy some insurance.


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## archanfel (Apr 7, 2009)

Too expensive to be worthwhile.
Not expensive enough to avoid zealously.


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## DrStan (Apr 5, 2009)

Kids are expensive, any way you look at it. However, I'm not sure the financial part should be the primary concern. Kids will have a huge impact on your life in general. They will take up an enormous amount of time, and require constant care for many years. It's a lifestyle choice. As my wife and I said before deciding to have kids, do we prefer being wealthy and travelling the world (DINKs) or do we prefer to leave a legacy to the world (our two kids)? It's a deeply personal choice! I think most parents will tell you that having kids is extremely fulfilling, and changes your life in a good way. There are ways to reduce the costs dramatically. You don't need everything the media and toy companies lead you to believe you need, and secondhand stores are a treasure trove of affordable clothing, etc.

I have taken unpaid leave so that I may stay at home with our daughter until she's 3, at which time she will go to daycare for 1 year before going to school. I think it's important to enhance socialization in a daycare setting before school. There is opportunity cost, of course, in the form of lost salary. Our combined leaves will have cost us about $150K over three years. But not everything is about money. Some people make $50K a year and raise their kids just fine, others make $150K and can't seem to make ends meet.

Notwithstanding the various pros and cons, I think you just "know" if and when the time is right. That was our case.


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## Arcaneind (Apr 3, 2009)

Again, it is a lifestyle choice more than anything. If you maintain all your current spending plus add kids, it will bankrupt you. On the other hand, if you replace your bar-hopping night with friends with kid's sports it won't be as big of an impact.

What I hate are new costs that arise now. Constantly being hit up for school, sport or club fund-raising is the worst!

As far as RESP's go, we max out the grant for the automatic 20% return and then save elsewhere. I've already told my daughter that we will pay for tuition but only for good grades: get over 75% and I'll reimburse for the course costs; get 74% and that bill is all hers.


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## canabiz (Apr 4, 2009)

DrStan, i just want to address one of the point in your post: You don't have to have children to leave a legacy to the world...there are other things a childless couple (by choice or otherwise) can do to make the world a better place. A few things come to my mind such as: adoption, volunteer and charity work.

Different folks have different reasons to have kids or not to have kids and I think we can all respect everyone's choices.


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## DrStan (Apr 5, 2009)

canabiz said:


> DrStan, i just want to address one of the point in your post: You don't have to have children to leave a legacy to the world...there are other things a childless couple (by choice or otherwise) can do to make the world a better place. A few things come to my mind such as: adoption, volunteer and charity work.
> 
> Different folks have different reasons to have kids or not to have kids and I think we can all respect everyone's choices.


Absolutely. That wasn't formulated very well; I just meant that living only for ourselves by travelling and blowing all the money would not be as fulfilling as kids, in our opinion. That's it. I should have said "our unique legacy" or something to that effect.


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## ethos1 (Apr 4, 2009)

DrStan said:


> Kids are expensive, any way you look at it. However, I'm not sure the financial part should be the primary concern. Kids will have a huge impact on your life in general. They will take up an enormous amount of time, and require constant care for many years. It's a lifestyle choice.
> 
> I have taken unpaid leave so that I may stay at home with our daughter until she's 3, at which time she will go to daycare for 1 year before going to school. I think it's important to enhance socialization in a daycare setting before school.
> 
> ...


good points

Married at 21 in 1968, the first 10-years were spent travelling, education, working, saving & investing

In our case we were married 10-years before having our first and then 8-years later the second one, at which time were both hitting 40-years old.

After the first child was born my wife stopped working totally altogether outside of the home

It all worked out in the end 

The kids were put through college & university - paid for by us

During the mid-early (what we considered to be the formative years) when the the kids were needing the most of us (I was in my early 40's) I dropped out of working life (by choice) for several years to be at home with my family.

I considered this to be the best time time of my (our) lives and it brought a sense of sanity to my mid-life wellbeing

Its not everyones plan & sometimes you cannot plan when or if you will ever become parents

The value of the kids goes way beyond any monetary value, and even now since they've left home, both are single - they are a pain in the backside at times, but we love them - they are ours


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## Mintycake (Apr 13, 2009)

ethos1 said:


> good points
> 
> Married at 21 in 1968, the first 10-years were spent travelling, education, working, saving & investing
> 
> ...



This amazes me - you must have had considerable savings for your wife to quit working in her early thirties and you to stop in your early 40s. How did you finance this? Did you end up going back to work? This is ideally what I'd like to do but there's no way we can afford it - one of us will have to work.


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## ethos1 (Apr 4, 2009)

Mintycake said:


> This amazes me - you must have had considerable savings for your wife to quit working in her early thirties and you to stop in your early 40s. How did you finance this? Did you end up going back to work? This is ideally what I'd like to do but there's no way we can afford it - one of us will have to work.


First off we were 31 (both born the same year) at the time when my wife stopped working when the first child was born, we were mortgage free at that point

I continued to work till 44 (1991), that is when I dropped out, at which time we lived off life savings & the RRSP's, which was zero when I went back to working life. 

At the time I dropped out in 1991, I was earning $60k/yr gross 

We had a small amount of passive income from a rental property.

I went back to school and dabbled PT doing bits of this & that for grocery money,then went back to active working life in 1994.

BTW, the day we got married in 1968 we had $500 in the bank, that was all the cash we had in total, us thinking we were rich at that time

Some would say we were lucky to be in the right place at the right time & of that generation without all of the toys, bells and whistles and no car till we were 27 years old. We took public transit everywhere

Hope this answers the questions and helps others


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## Mintycake (Apr 13, 2009)

Thanks - that clears it up. I thought you left working life in your early 40s and never went back.

We are in the position where our RRSP's are maxed out, we have about $100K in non registered savings and investments (half of that is in cash for a rainy day fund) and we are mortgage free. We make gross $125,000 a year but once we go down to one salary we will make $55K a year. We currently spend approximately $48K a year so technically we bank one salary at the moment anyway.

I do plan to eventually return to work but I don't think I will be making near the amount of money I make now as it will be part time.


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## Rickson9 (Apr 9, 2009)

ethos1 said:


> The kids were put through college & university - paid for by us.


Hi Ethos,

How do you differentiate between the pros and cons of paying for your child's tuition v. having them pay it themselves v. somewhere in the middle where the child pays for a portion?


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## ethos1 (Apr 4, 2009)

Mintycake said:


> Thanks - that clears it up. I thought you left working life in your early 40s and never went back.
> 
> We are in the position where our RRSP's are maxed out, we have about $100K in non registered savings and investments (half of that is in cash for a rainy day fund) and we are mortgage free. We make gross $125,000 a year but once we go down to one salary we will make $55K a year. We currently spend approximately $48K a year so technically we bank one salary at the moment anyway.
> 
> I do plan to eventually return to work but I don't think I will be making near the amount of money I make now as it will be part time.


For me what you have said, it would seem that you are in a good position financially, however expenditures of $48k per year with no mortgage-eck, that is a lot of money, unless a portion of that is the carrying cost of the investments which should be offset by the investment income or growth.

Do you think that living off of one salary of $55k/yr + one-year of maternity benefit will be enough, or will you need to take from the savings or investments?

Are you planning any reductions in expenditures to compensate for the new child?


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## Tim (Apr 3, 2009)

How much do kids cost? About $200/month for two boys and in addition RESP = Child Tax Benifits.

It all depends how you want to raise them. We tend to be more on the spending time with them than spending money on them camp. Also the army of family keep buying gifts so we don't buy much for toys for them.

It's really more of a personal lifestyle decision. Kids are fun, but also make you want to pull your hair out at times.


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## ethos1 (Apr 4, 2009)

Rickson9 said:


> Hi Ethos,
> 
> How do you differentiate between the pros and cons of paying for your child's tuition v. having them pay it themselves v. somewhere in the middle where the child pays for a portion?


We thought long about this & debated it at the time & discussed the pro's & con's with the kids when the time came, but since there was an eight year age difference the choices as well as the outcome was different

a) do we allow them to stay at home with all of the luxuries (free room & board) and have them pay for their education at one of the Toronto schools & they having to work P.T and during the summer for all expenses 

b) do we pay for the three or four years of further education (capped time frame) and let them choose any college or university in Canada. They would be out of town but still would have to work during summer or PT for personal & living expenses

c) do they pay all costs associated with school as well as personal expenses, then we reimburse the tuition fees upon graduation

We wanted a win-win

We wanted them to be successful, to be happy about it and to complete their studies with the least amount of stress

I dont know whether it is because they are different ages or whether the fact that one is a boy the other a girl, but they did not choose the same option


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## Mintycake (Apr 13, 2009)

ethos1 said:


> expenditures of $48k per year with no mortgage-eck, that is a lot of money, unless a portion of that is the carrying cost of the investments which should be offset by the investment income or growth.
> 
> Do you think that living off of one salary of $55k/yr + one-year of maternity benefit will be enough, or will you need to take from the savings or investments?
> 
> Are you planning any reductions in expenditures to compensate for the new child?


I agree...I think $48K is a lot! However, we're currently spending about $15K of that on travel a year which we plan to eliminate when baby comes along. Another $6000 of that is a car payment that will be done next year - but we plan to bank that as an emergency fund. No debt other than some rather large interest only investment loans which spin off enough money to cover the interest and a bit left over to cover the cost of our life insurance. We're also spending about $4000 a year on eating out and another $1000 on entertainment, which we expect to cut in half. Another $2000 a year on the cleaning lady will also be eliminated once I stay home. So once baby comes along I figure expenses will be down to about $30K a year. Because my husband is self employed, he has a lot of write offs and tends to be taxed favourably. So in year one we will definately not dip into savings. After that, we are planning a couple of lean years until our child is in school full time at which point I will take on part time work. Also, $55K is a "low" year for my husband, he has potential to make more but I think he will also cut back his hours when we have a child in order to spend more time at home, so I'm using conservative numbers.

My husband plans to continue to contribute to his RRSP and we'll probably start using some income splitting later on in the form of spousal loans.


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## Mintycake (Apr 13, 2009)

ethos1 said:


> a) do we allow them to stay at home with all of the luxuries (free room & board) and have them pay for their education at one of the Toronto schools & they having to work P.T and during the summer for all expenses
> 
> b) do we pay for the three or four years of further education (capped time frame) and let them choose any college or university in Canada. They would be out of town but still would have to work during summer or PT for personal & living expenses
> 
> c) do they pay all costs associated with school as well as personal expenses, then we reimburse the tuition fees upon graduation


This is an interesting debate. I plan to allow my kid to stay home rent free during university/college but they must contribute to a part of their education - they will not get a free ride. If they choose to go away for school, that's on their tab. Pay for everything and I find the kid may not appreciate it. Pay for nothing and your kid might resent you and/or not be able to take advantage of opportunities that present themselves.


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## ethos1 (Apr 4, 2009)

Mintycake said:


> I agree...I think $48K is a lot! However, we're currently spending about $15K of that on travel a year which we plan to eliminate when baby comes along. Another $6000 of that is a car payment that will be done next year - but we plan to bank that as an emergency fund. No debt other than some rather large interest only investment loans which spin off enough money to cover the interest and a bit left over to cover the cost of our life insurance. We're also spending about $4000 a year on eating out and another $1000 on entertainment, which we expect to cut in half. Another $2000 a year on the cleaning lady will also be eliminated once I stay home. So once baby comes along I figure expenses will be down to about $30K a year. Because my husband is self employed, he has a lot of write offs and tends to be taxed favourably. So in year one we will definately not dip into savings. After that, we are planning a couple of lean years until our child is in school full time at which point I will take on part time work. Also, $55K is a "low" year for my husband, he has potential to make more but I think he will also cut back his hours when we have a child in order to spend more time at home, so I'm using conservative numbers.
> 
> My husband plans to continue to contribute to his RRSP and we'll probably start using some income splitting later on in the form of spousal loans.


That is great & you should have no problem doing it even on reduced wages + the maternity benefit to get you through the costly first 12-months

You said

$48k is a beginning point - minus

$15k Travel
$6k Auto payments
$5k Entertainment & food
$2k Cleaning person

that takes it down to $20k

On the assumption your spouse salary is gross $55k, the take home would be in and around $40k

Running costs for the new Baby through to year 2 will cost you at least about $300-$400/mth. After that about $400 -600/mth for the next 2 years then levels off at (in todays money) at about $200 - $300/mth

In year one you will have capital outlay for the new child, your lives will change somewhat, no more high living (unless of course) and you will be dog tired for the first 6-months 

After that its a breeze


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## Rickson9 (Apr 9, 2009)

ethos1 said:


> c) do they pay all costs associated with school as well as personal expenses, then we reimburse the tuition fees upon graduation.


I never thought about this option. I like this idea!


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## ethos1 (Apr 4, 2009)

Rickson9 said:


> I never thought about this option. I like this idea!


my daughter the younger of the two chose option c)

We think because of the fact that we had this child later in life and the fact that she is a girl (more responsible) by nature is a giving and generous person, chipping in buying stuff as well as contributing to the household without being asked

my son the elder one chose option a)

Depends on the child and the relationship they have with you & your expectations of them

We also felt that since the elder one is a boy that there was a bigger expectation or higher level of achievement warrented

I dont know if others have any comparisons they could share, I do hope some of this information helps others


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## archanfel (Apr 7, 2009)

I would probably choose 

d) Kick them out. Hopefully they can get loans from the government. If not, we will loan them money at market rate (meaning very high since they have no collateral or income). We will also set up scholarships for them if they can't get it from the school.


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## ethos1 (Apr 4, 2009)

archanfel said:


> I would probably choose
> 
> d) Kick them out. Hopefully they can get loans from the government. If not, we will loan them money at market rate (meaning very high since they have no collateral or income). We will also set up scholarships for them if they can't get it from the school.


are you married with kids?


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## archanfel (Apr 7, 2009)

ethos1 said:


> are you married with kids?


LOL. That obvious, eh?


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## The_Number (Apr 3, 2009)

FrugalTrader said:


> We have a one year old now which has been the best thing to happen to our family. Yes, babies can be a bit costly, but they are worth every penny!
> 
> I've written some articles for (potential) new parents that explain the costs ,various tax credits and government programs:
> 
> ...


I noticed that I came in late to this thread, but I just want to thank FT for all the links. As somebody who is trying to get there in 5 years or so, I find the information quite useful in planning how much to save/expect.


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## Maple_Leaf (Apr 20, 2009)

*Economics of Shared Living*

Here is a link to an interesting article on the economics of shared living. Included would be families, roommates, communes, etc. In summary, two cannot live as cheaply as one, but due to sharing fixed expenses, about 40% more than one. A family of four can live about as cheaply as two independently living individuals. I find an interesting symmetry in that.

http://assetbuilder.com/blogs/scott_burns/archive/2008/06/06/the-n-factor-and-retirement-planning.aspx

I hope the link posts OK.


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## Kathryn (Apr 10, 2009)

A lot but they are worth every penny. 

Between clothes, allowances, RESPs, friend's birthday parties, day-care, day camps, field trips, sick days missed from work caring for them, birthdays and Christmas, it can really add up. Vacations can double with two school age kids with the cost of flights. Then you'll need to up your life insurance too just in case something happens to you and / or your spouse. 

Day camps are running about $200 a week here for the summer and in Ontario we're getting a 10 week summer this year!


My kids are 8 & 10 and they seem to be getting more expensive with every year.


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## Kathryn (Apr 10, 2009)

Kathryn said:


> A lot but they are worth every penny.
> 
> Between clothes, allowances, RESPs, friend's birthday parties, day-care, day camps, field trips, sick days missed from work caring for them, birthdays and Christmas, it can really add up. Vacations can double with two school age kids with the cost of flights. Then you'll need to up your life insurance too just in case something happens to you and / or your spouse.
> 
> ...


And wait .. there's more! If you order now, you might even get a special needs kid like we did. They are twice as sweet but expect to double your expenses with assessments, occupational therapy, physical therapy, tutoring and other related devices. 

Prescriptions are outrageous if you don't have coverage (which we don't). Your kids gets pink eye. $50 for the antibiotic drops! Asthma .. you don't even want to know. 

Then there's extra curricular activities. Hockey for the average Canadian kid is $3500 a year. Then there's gymnastics ($80 a month in most cities) or swimming ($55 a session per kid around here). Want to try music lessons? Then there's the instrument and the cost of lessons.

Don't let me scare you out of it though. I've never looked back. I don't resent or begrudge them a cent of it. If I had my life to live over again, I'd still have them, even if it means our million dollar journey is years away.


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## mfd (Apr 3, 2009)

Kathryn said:


> And wait .. there's more! If you order now, you might even get a special needs kid like we did. They are twice as sweet but expect to double your expenses with assessments, occupational therapy, physical therapy, tutoring and other related devices.
> 
> Prescriptions are outrageous if you don't have coverage (which we don't). Your kids gets pink eye. $50 for the antibiotic drops! Asthma .. you don't even want to know.
> 
> ...



God help me...


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## lb71 (Apr 3, 2009)

Kathryn said:


> A lot but they are worth every penny.


And then some.


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## canabiz (Apr 4, 2009)

Kathryn said:


> And wait .. there's more! If you order now, you might even get a special needs kid like we did. They are twice as sweet but expect to double your expenses with assessments, occupational therapy, physical therapy, tutoring and other related devices.
> 
> Prescriptions are outrageous if you don't have coverage (which we don't). Your kids gets pink eye. $50 for the antibiotic drops! Asthma .. you don't even want to know.
> 
> ...


Kat, I am just chiming in to say parents don't necessarily have to get their kids to play hockey. There are other sports that cost much less and also produce similar results in terms of exercise, team-building, and leadership skills. Soccer and baseball in the summer and basketball (summer/winter) comes to mind. I love hockey as much as any other Canadian sports fans but the cost to play and enjoy the game is another issue altogether. That is why you don't see a lot of visible minorities/immigrants partaking in Canada's national pastime. It's not because they don't want to integrate, it is because cost is a big factor. 

At least, we can always cheer on our favorite Canadian teams!


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## Kathryn (Apr 10, 2009)

canabiz said:


> Kat, I am just chiming in to say parents don't necessarily have to get their kids to play hockey. There are other sports that cost much less and also produce similar results in terms of exercise, team-building, and leadership skills. Soccer and baseball in the summer and basketball (summer/winter) comes to mind. I love hockey as much as any other Canadian sports fans but the cost to play and enjoy the game is another issue altogether. That is why you don't see a lot of visible minorities/immigrants partaking in Canada's national pastime. It's not because they don't want to integrate, it is because cost is a big factor.
> 
> At least, we can always cheer on our favorite Canadian teams!


Good point. My kids don't play hockey. I just heard them talking about the costs of hockey on CBC Radio the other day. 

They do wear eyeglasses though and we may be looking at braces in the future too.


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## Mintycake (Apr 13, 2009)

I agree! It always irks me to hear parents complaining about how much their kid cost them but the costs are not necessities (well, maybe they are to some people). Your kid does not have to play hockey, have an Xbox, Playstation, AND a Wi, along with all the games for it, does not have to have an entire basement filled with toys, designer clothes. I plan to raise a kid, not a consumer. My husband loves hockey but he grew up playing cheaper sports like basketball. 

The other complaint is "Oh if my teen doesn't play hockey (substitute expensive sport here) they will sit around and get into trouble!" Okay, if your kid isn't busy enough with school and maybe one cost effective activity, maybe they should go out and get a part time job! Believe me, I have worked part time since I was 14 and between my job and my school I had NO time to get into trouble.

I think too many parents try to "buy" their kids to make up for the lack of time they spend with them as a parent. We have a nation of overscheduled and under parented kids. Just my two cents.


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## CanadianCapitalist (Mar 31, 2009)

I'm thinking I should try and sell the virtues of long distance, bare foot running (Kenyan-style) to my kids


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