Are you looking to start a family in the near future? Better factor this into your home-buying decision. The challenges millennials face today are well-documented: record-high student debt, a lackluster job market, and a pricey housing market, to name a few. Before you make an offer on your dream home, it’s important to factor in how having a child will impact your family’s budget.

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Having a child is a wonderful experience, but it doesn’t come cheap. The average cost of raising a child to age 18 is $243,660, finds MoneySense magazine. You should expect to spend $12,825 per child annually or $1,070 per month (and that’s without considering the added cost of post-secondary education). If you’re planning on having more than one child like many parents do, you can easily end up spending more on raising your children than your housing costs (not that there’s anything wrong with that, but it’s important to be aware).

Why are children so darn expensive? One of the main reasons is sky-high childcare costs. In Toronto, which holds the dubious honour of being Canada’s most expensive city to raise a child, parents can expect to spend an average of $1,033 a month on daycare fees, finds a study by the Canadian Centre for Policy Alternatives.

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Be Ready and Willing to Make Trade offs

When it comes to buying a home in red hot real estate markets like Toronto and Vancouver, home-buyers often have to make trade-offs. Just because your lender says you can afford a home for $800K, doesn’t mean you should spend that much. It’s important to run the numbers and see what your mortgage payments would be. If you can find a home for $700K or $750K with everything you’re looking for – great! It gives you and your budget that much more breathing room.

Also, don’t forget to factor in lower income during maternity or parental leave. You can only expect to receive 55 percent of your working income during maternity/parental leave up to a maximum of $537 per week. If you decide to return to the workforce, you’ll have to factor in daycare costs, as well (if your parents are willing to babysit for you, it can mean the difference between buying your dream home and a smaller home in a not-so-nice neighborhood). If you feel your budget leaves little room to raise a family, you may be better off opting for a starter home or condo instead of your dream home.

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Buying As Much Home As You Can Afford

Avoiding the common mistake of buying as much home as you can afford, makes raising a child that much easier. You can spend time with your family and may not have to take on a second job to pay for your dream life. Most importantly, a home you can afford gives you more of a cash cushion. You won’t find yourself “house rich, cash poor.” You’ll have money left over to save and invest in your RRSP, TFSA and RESP. (To help your savings grow even faster, Smart Money has a number of low-fee ETFs to choose from.)

There’s no better experience in the world than starting a family, just make sure you aren’t blindsided by the costs. Buying a home you can truly afford makes life a whole lot easier for your family and you.

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