Financial Talk

As you know, adoption is expensive. International adoption in particular.

While you wait for a referral, it’s a good idea to try saving as much as you can. This way, you can minimize the amount you have to borrow to pay for plane tickets, in-country expenses and professional fees and to make up for the lost salary if you’re going to take parental leave.

Whether you cut back on restaurant expenses, downsize your vacation plans, take a second job, collect donations from generous friends or organize a fundraiser, you’ll see your adoption account slowly swell to a more comfortable level.

The question of how to maintain the value of this money will certainly come up at some point. It has for us.

Yesterday, we met with a financial advisor at our bank. We sat with him and explained what our goal was. Since we don’t know what the timing of our adoption will be, and we have a very specific goal that we cannot concede on, our conditions were pretty rigid. Our basic question was: “Can you help us get the most interest for this money while  a) keeping it fully cashable within a few days notice and b) keeping it completely safe?”

So we looked at all sorts of options. We looked at Guaranteed Investment Certificatess, but cashable ones have ridiculously low interest rates right now. We talked about mutual funds and stocks, but we can’t afford to risk our baby’s homecoming money. We even looked at using our mortgage as a credit line. Although this option has advantages in the long run, it would create a cashflow problem at the time of our travel to Sri Lanka.

After crunching numbers and looking at interest rates for almost an hour, we came to the conclusion that our money was best exactly where it was now.

So here is what we figured was best for someone saving for an adoption who has no idea when they’ll need the money and who will get very little notice:

-          Open up a Tax Free Savings Account – pick the one with the best interest rate that is cashable at any time and guaranteed.

-          Deposit your adoption money in your TFSA until you max out your limit.

-          Deposit any extra money you manage to save into a non-registered savings account – again, pick the one with the best interest rate that is cashable at any time and guaranteed.

Note that if you pull money from your TFSA, you have to wait to the next year before you can refill it. So if you know you’re going to need some of the money in the short term, you might as well deposit this money in your non-registered savings account until you need it.

One more side note: this is true in today’s financial world, with very low interest rates. When things start picking up again, other types of savings account may become more interesting.

And one final piece of advice: don’t take my word for it! If you’ve been putting money aside for your adoption, you owe it to yourself to book an appointment with a financial advisor. You don’t want to find out 2 years down the road that you could be $1000 richer!