Just Had a Baby. Here’s What to Do With Your Money in the Next 90 Days
September 4, 2026
The government will hand you $500 the moment your child is born. You just have to open one account and deposit $2,500 into it. That is the single highest-return financial move available to new Canadian parents, and a surprisingly large number of families miss part or all of it simply by waiting too long. Not because they lack the money. Because they’re exhausted, nobody told them the deadline matters, and the hospital discharge paperwork does not mention the Canada Education Savings Grant.
This article is not a comprehensive financial plan. It is a 90-day action sequence for parents who are functioning on four hours of sleep and need someone to tell them what actually matters right now, in what order, so they can stop worrying about the rest. The stakes are real: some of these decisions are irreversible, and the window to capture free government money is shorter than most advisors let on.
Why the First 90 Days Matter More Than the First Year
Most financial milestones in Canada are forgiving. Miss an RRSP contribution year? You carry the room forward. Forget to top up your TFSA? It resets every January. The RESP grant system does not work this way. The Canada Education Savings Grant is a 20% match on up to $2,500 contributed to an RESP per year, per child. That is $500 per year in free money from Ottawa. The lifetime maximum is $7,200 per child. Neither the annual cap nor the lifetime cap expands because you were late starting.
You can carry forward unused grant room, but only one year at a time. This means if you delay opening an RESP until your child is two years old, you can potentially catch up on one missed year by contributing $5,000 in a single year and receiving $1,000 in CESG. But you cannot recover three years of missed grants at once, no matter how large your deposit. The math on delay is punishing: a family that starts contributing in the child’s birth year rather than at age two captures one additional $500 grant per year of delay, compounding inside the RESP at whatever the market returns over the following 18 years. At historical equity returns, that single missed $500 grant can represent thousands of dollars by the time the child enrolls in post-secondary education.
The CESG is the highest guaranteed return available to Canadian parents. Turning $2,500 into $3,000 before the money is even invested is a 20% instant return. No stock, no GIC, no advisor’s recommended fund can reliably match it.
To receive the CESG, your child needs a Social Insurance Number. Applying for it is one of the first administrative tasks that belongs in week one after you’re home from the hospital. Service Canada will issue your child’s SIN quickly, and you need it before any RESP can be opened in their name.
The RESP: $2,500 and the CESG Should Be Your First Move
Open a Family RESP. The Family designation allows you to add future children as beneficiaries, which eliminates the bureaucratic hassle of managing separate individual accounts. If one child ends up not attending post-secondary school, unused funds can be redirected to a sibling’s education without triggering grant repayment. Both Questrade and Wealthsimple offer free RESP accounts with no annual fees, so the vehicle itself costs you nothing.
Once the account is open, contribute $2,500 as soon as possible in the calendar year. The CESG is calculated on an annual basis, and the government deposits the matching $500 grant after you contribute. If your child is born in October, contribute $2,500 before December 31 of that year to capture the first year’s grant. If your cash flow is tight, even contributing $2,500 and redirecting it to cover living costs a few months later is still less costly than missing the grant entirely, though it is far better to leave the money invested.
CESG math per child: 20% match on up to $2,500/year = $500 free per year. Lifetime grant maximum per child: $7,200. RESP contribution lifetime limit per beneficiary: $50,000. CESG is only available while your child is a Canadian resident and under age 18.
What do you invest the RESP in? XEQT. Your child has an 18-year horizon minimum, which is longer than most people’s entire investing careers. With that kind of runway, an all-equity portfolio built around XEQT’s globally diversified holdings across approximately 9,000 companies is the appropriate default. The MER is 0.20%, rebalancing is automatic, and you never need to touch it until the child approaches the end of high school, at which point you can gradually shift toward something more conservative. For a plain-language explanation of what you’re actually buying with that single ticker, this complete guide to XEQT covers the structure, the underlying ETFs, and how the whole thing works. For the early years of the RESP: buy XEQT, set up automatic monthly contributions, and stop looking at it.
One important note: the CESG is linked to the primary caregiver’s status and the child’s SIN, not to how many accounts exist. If well-meaning grandparents open a separate RESP for your child, the grant room does not multiply. The lifetime $7,200 per child cap is shared across all RESPs opened in that child’s name. A Family RESP that you control is cleaner and simpler.
Life Insurance: The Uncomfortable Conversation That Cannot Wait
Canadian two-income households with a newborn are, financially speaking, exposed in a way that a single person or even a couple without dependants simply is not. The mortgage still requires two incomes to service comfortably. Daycare, once it starts, adds a material fixed cost to the budget every month. And one income earner is probably on parental leave, drawing a fraction of their usual salary. This is exactly the moment when the loss of one income would be catastrophic, and it is also the moment when most Canadian couples have not yet sorted their term life insurance.
Employer group benefits plans typically offer life insurance coverage of one to two times your annual salary. Against a large mortgage and years of income replacement needed, that gap can be substantial. Mortgage insurance sold by lenders is materially more expensive than comparable term life insurance, can require requalification when you switch lenders, and pays out to the bank rather than your family. Term life, bought independently, is cheaper, more flexible, and your beneficiaries decide how to use the payout.
Lock in your term life insurance rate while you are young and healthy. Every month of delay is a month of rate-lock risk. A health event that occurs before you apply can change your premiums permanently or disqualify you entirely.
For most new Canadian parents, a 20-year term policy that covers ten to fifteen times the higher-earning spouse’s income is a reasonable starting point. The lower-earning or caregiving partner needs coverage too: the cost of replacing their contribution to childcare and household management is real and consistently underestimated. Buy term. Invest the difference between term and whole-life premiums in XEQT. Ignore anyone trying to sell you an investment-linked insurance product in the first 90 days after birth. The complexity is not in your interest.
TFSA or Non-Registered: Where to Park Surplus Savings
Beyond the RESP, new parents often find themselves holding savings in a chequing account and wondering where it should go. The answer depends entirely on your time horizon and what the money is actually for.
Money you expect to need in the next five to seven years belongs in your TFSA, invested in something appropriate for that horizon. The TFSA’s annual limit in 2026 is $7,000, and the cumulative room for someone who has been eligible since 2009 is $109,000. If you have not been maxing your TFSA, you likely have significant room available. TFSA withdrawals are tax-free and restore your contribution room the following calendar year. For mid-term savings goals like a larger vehicle, childcare equipment, or a home upgrade, the TFSA with a balanced allocation makes sense.
Money with a genuine long-term horizon of ten or more years can go into a non-registered account holding XEQT, once your TFSA and RRSP room is exhausted. There is a common misperception that the non-registered account is so tax-inefficient as to be nearly useless. It is less efficient than registered accounts, but XEQT’s distributions are reported on a T3 slip (it is structured as a trust, not a corporation), and most of the fund’s long-run return comes from capital appreciation rather than income, which helps with tax efficiency. For genuinely long time horizons, the non-registered account is not a problem to be solved, it is simply the next layer.
Account priority for new parents: RESP first to capture the CESG, then remaining TFSA room for medium-term flexibility, then RRSP when your marginal rate is high, then non-registered for anything beyond. Do not make large RRSP contributions in a year when parental leave has already dropped your income to a lower bracket. The deduction is worth significantly more when you return to full income.
One specific mistake worth naming: advisors sometimes push RRSP contributions during the year a parent is on parental leave, because the room exists and there is cash available. Contributing to an RRSP when your effective marginal rate is low because leave income has reduced it gives you a smaller tax deduction than waiting. Carry the room forward. The RRSP deadline for the 2026 tax year is March 1, 2027. There is no urgency to contribute when your income is temporarily reduced.
The Safety Nets Most New Parents Forget to Review
Having a child creates or changes your eligibility for several government programs and employer benefits that are easy to overlook when you are operating on broken sleep.
Beneficiary designations on all registered accounts should be updated immediately. Your TFSA, RRSP, and any employer pension or group insurance plan all have a named beneficiary field. If that field still names your parents, or was never filled in, account proceeds may flow through your estate on death, triggering probate and delays. Naming your spouse directly bypasses probate entirely. If you want to designate your child, you need to appoint a trustee to hold the funds until they reach the age of majority, since minors cannot directly receive large sums. Updating beneficiary designations on your accounts costs nothing and takes roughly 20 minutes online.
The Canada Child Benefit begins flowing automatically once CRA has both parents’ tax returns on file. If you have not filed recently, this is the trigger. The CCB is income-tested and tax-free, and for lower-income families it can represent a meaningful annual amount for children under six. Make sure your tax returns are current so the calculation is accurate from the start.
If either parent contributes to CPP and has done so for several years, they are building CPP Disability eligibility. CPP Disability provides income replacement if a contributor becomes severely and prolongedly disabled. For a new parent who is now the primary financial support for a dependent, understanding that this safety net exists and requires maintaining CPP contributions is part of a complete financial picture.
Employer group benefits plans should be audited within the first few weeks. Most plans allow a life-event update that lets you add your new child and potentially increase coverage without new medical underwriting. Miss that window and you may face underwriting requirements that did not exist before. A quick call to HR or your group benefits administrator closes this off quickly.
Your 90-Day Sequence, In Order of Urgency
During the first two weeks home, apply for your child’s SIN through Service Canada. This is the foundational administrative step that everything else depends on. Without it, no RESP can be opened.
Once you have the SIN, open a Family RESP on Questrade or Wealthsimple and make your initial contribution of $2,500 in the same calendar year your child was born. Buy XEQT inside the account and set up automatic monthly contributions for whatever you can sustain. Even modest monthly contributions compound meaningfully over 18 years, and the psychological benefit of automation is that you stop making active decisions about it each month.
Between weeks three and five, address term life insurance. Get independent quotes, select coverage that replaces ten to fifteen times your household income, and complete the medical declaration while you are healthy. Rates are set at application, and your age and health at that moment are locked in for the term. Update your group benefits with HR to add your new child as a covered dependent.
Between weeks four and six, update beneficiary designations on all registered accounts. Log into your brokerage and complete this for every account you hold. If your situation involves a will update or trustee appointment for minor beneficiaries, add a brief consultation with a notary or estate lawyer to the list.
Between weeks five and eight, decide where surplus monthly savings go after the RESP contribution. TFSA room for mid-term needs, RRSP room deferred until you return to peak income, and non-registered for anything truly long-term. Set everything to autopilot. A practical framework for sizing monthly investment contributions as your household expenses shift is worth revisiting once the dust settles after parental leave.
The goal of the next 90 days is not portfolio perfection. It is putting the right structures in place so that the decisions you are not actively making are still good ones by default.
Why You Do Not Need to Make Big Investment Decisions Right Now
New parents are routinely told they need to catch up on investing because parental leave, daycare costs, and the general financial disruption of a new child mean they have fallen behind. This framing is almost entirely wrong, and acting on it leads to rushed decisions and unnecessary complexity.
The RESP setup and CESG capture is not a catch-up move. It is a straightforward, high-return action with a fixed government subsidy. Everything else, optimizing your asset allocation, deciding between XEQT and a balanced alternative, figuring out whether to accelerate RRSP contributions, can wait until you are sleeping more than four consecutive hours.
XEQT’s current price sits near its 52-week highs, but the research on market timing is unambiguous: time in the market consistently outperforms attempts to find the right entry point, and automated monthly contributions into a broadly diversified fund remove the temptation to wait. The data on waiting for the perfect moment to invest makes this case conclusively. For a new parent with an 18-year RESP horizon and a 30-plus-year TFSA horizon, short-term price movements are background noise.
The most powerful financial tool available to you right now is not a better ETF or a more sophisticated tax strategy. It is the combination of the CESG grant, a guaranteed 20% return on your first $2,500, and a term life insurance policy that means your family’s financial plan does not collapse if something happens to you. Get those two right, set everything else to autopilot with XEQT as the default investment, and give yourself permission to focus on the baby.
Frequently Asked Questions
Can I open an RESP before my child has a SIN? No. Your child’s Social Insurance Number is required to open an RESP in their name. Apply through Service Canada as soon as possible after the birth. Processing is generally quick, and until the SIN arrives you can gather your brokerage account information and have everything else ready to go.
What happens to RESP money if my child does not go to university or college? The RESP can be used for a wide range of post-secondary programs beyond university degrees, including trades, colleges, and technical training. If the child does not attend any qualifying institution, you can transfer up to $50,000 of the investment earnings to your RRSP if you have the contribution room, withdraw your original contributions tax-free, and repay the CESG grants to the government. You do not lose your original contributions.
Should I prioritize the RESP or my TFSA in the first year? The RESP comes before discretionary TFSA contributions in the first year, specifically because of the CESG grant. A guaranteed 20% return on $2,500 is not available anywhere in the TFSA. Once the $2,500 RESP contribution is secured for the calendar year, direct surplus savings to your TFSA for medium-term flexibility, and consider deferring RRSP contributions until you return to a higher income year after parental leave ends.
How much term life insurance do new Canadian parents actually need? A commonly used starting point is ten to fifteen times the higher earner’s gross income, plus any outstanding debts, with the mortgage balance being the most significant. Get independent quotes through a broker rather than through your mortgage lender’s offered coverage. The lender’s product pays the bank, an independent policy pays your family, and your family decides how to use it.