Having children is a big life decision. Not only is it an emotional journey, but it includes financial considerations as well. It can be costly to raise kids and the impact they will have on your finances is worth considering before beginning the process of growing your family. Here are some steps you can take to be prepared financially when it’s time to start planning for having kids.
Plan Ahead
Having a good financial plan in place is the foundation for financial stability when you have a child. Start by setting goals that identify what you need to do for a successful family financial plan. Consider what steps you’ll take to meet these goals, such as saving money and creating an emergency fund.
Creating a Budget
Acknowledge upfront that having a baby will add to your expenses. Create a budget that reflects the added cost and plan ahead to save before the birth of your child arrives. Include the cost of daycare into an updated budget, if applicable. Adjust your budget for cost of living increases for items such as groceries and other baby-focused items that you will need to purchase.
Start Saving
Start setting aside money for your future family. Put aside money in a savings or money market account so you’ll have liquid funds available when needed. Also, remember to take advantage of any tax advantages that might apply to items such as college savings.
Update Your Life Insurance
Life insurance is important to have, especially if you are one of the two breadwinners. Consider purchasing or increasing coverage to ensure financial stability in the event of a death, to provide financial security and peace of mind for your family.
Secure Health Insurance
Having health insurance to cover yourself and any future children is essential. Research plans and begin the process of applying for and setting up insurance coverage prior to attempting to have a child. Have premiums set up to be paid automatically and ensure that the plans you’ve picked have been reviewed with a qualified healthcare and/or insurance provider.
Have an Emergency Fund
Unexpected expenses can occur when having children, such as medical emergencies, time away from work and so on. Have an emergency fund available so you don’t have to worry about such costs. Consider having at least six months’ wages set aside in a separate savings account or money market account.
Check Your Credit
Having a baby includes making large purchases, such as a crib, car seat and so on. Knowing your credit score and having a clear financial background is important. Review your credit history and improve areas, if needed.
Pay Off Debt
Be sure to have any debt fully paid off before you begin the process of having a child. Get rid of all credit card debt, student loan debt and so on. Have a plan in place that will get debt paid quickly and effectively
Final Financial Steps
Creating a will is an important step to take before having a child. Have your will and any other estate related items reviewed by an attorney and make sure to update beneficiaries on your insurance policies or other items that may require this step.
Having a child is a joyful experience and an exciting time, but it’s also important to consider the financial aspects of having a child. Taking steps such as planning ahead, setting a budget, and having a financial plan in place before starting the process of having a baby is an important step to take. With careful planning and consideration, you can prepare financially and rest assured that when it’s time to bring a baby into the world you have taken care of necessary financial steps to be financially secure and better prepared for the adventure ahead.