Financial Factors to Consider Before Having Kids
January 21, 2015
There comes a time in many people’s lives where you begin to casually wonder if you will have children. Regardless of your status – whether you are married or single – it can be a costly decision if you choose to have children. According to a study done in 2014 by the U.S. Department of Agriculture, a middle-income family will spend on average $245,340 to raise one child from birth to age 18.
I recommend that you take time before making the decision to reflect on the following things that can help you determine if you are ready to make the leap into parenthood.
You are Rid of Excess Debt
Determine how much debt you and your spouse have accumulated, come up with a plan and set a goal date to have the debt completely paid off. Once it is paid off, you can begin saving for your growing family.
Career and Income Decisions Have Been Made
Budgeting and saving money can be difficult in itself, so remember that costs associated with a new child will be an additional expense to your monthly expenses. You will need to determine if your goal is to maintain a dual-income household or attempt to live off a single-income. You will also want to come up with a plan of action for maternity or paternity leave. Can your budget survive if both you and your spouse take time off?
You Have Adequate Health Insurance Coverage
Even if you have health insurance, the costs for prenatal, maternity and postnatal care can be huge. Depending on your health insurance coverage, unforeseen circumstances like a cesarean section or extended hospital stay can present new parents with a hefty hospital bill.
Baby Clothes are covered
Infants grow at such a rapid speed, be careful because many outfits you purchase they may only wear and fit into for a single month! Before you bring home your baby, you should have a game plan that involves secondhand baby clothes.
Your Budget Has Room for Child Care
Child care is a very large expense when it comes to raising a child. You can choose to avoid this expense by having one parent stay at home, however most modern households are dual-income. Assessing how child care will be handled and paid for in advance can help you prepare for this large expense.
You are Prepared to Save for College
Many parents still choose to support their children’s college educations to some extent. However, we recommend that before you even start saving for their college, to make sure you are maxing out your contributions to your own retirement plans first.