Children are expensive, without question. Many financial planners claim that a home is the largest investment that most people will ever end up making, but they are forgetting the investment that goes along with having children. Raising kids far exceeds the amount of money spent on a home. There are all kinds of things to consider when it comes to planning for a child, and if money were the only consideration a lot more people would be childless.
photo credit: Sarah Wampler
The Basics
In the beginning you need to consider the basics; things like reduced income from time off during pregnancy and birth, the cost of diapers, baby food, stroller, and baby clothes (the list goes on). You need to get clear on what your employee benefits are through your employer. Do you have short-term disability coverage? If you do it will typically cover 60 to 70 percent of your income for a six week period. Even if you don’t have coverage you may still be able to take time off due to the Family Medical Leave Act (FMLA).
Insurance and Finances
If you and your spouse have separate insurance plans, consider combining them to see if you can save money if you are all covered under one plan. This way you are making one payment each month instead of two. If it is cheaper to keep the plans separate, then there is no need to combine them. You will also want to start considering updating your insurance plans to cover the new family member. This includes car insurance plans. Your monthly rate may increase for car insurance, but often if you use one company for multiple services- meaning that you get all your insurance needs (health, car and otherwise) from one company, you can often receive a discount.
Baby Fund
If you are still only in the beginning stages of planning for a child and are not yet pregnant (or even if you are) start a baby fund where you put aside a set amount of money with each pay period. This is for unexpected expenses, and there will definitely be some when you have a child. Start exploring child care options way ahead of time so that you can find what is most affordable and comfortable for you when the baby finally arrives.
If you are ready to start buying equipment, be sure to save whenever you can. For car seats and strollers it is important to have high quality equipment for the greatest safety, but things like cribs and high chairs don’t need to be brand new. See if you can find some hand-me-downs from friends or family. If nothing is available there, look at used furniture stores and shop there. Your baby won’t know the difference and they will grow so quickly that most of the equipment you have will be used for a matter of months before it is too small.
Perhaps the most important things to keep in mind are the basics: budget, save, invest. That being said, map out expected expenses and leave some room for the unexpected; make a baby budget. Ideally you will do this far enough in advance to find a way to cover all your bases before the first child is born. Map it out so that you aren’t derailed and pushed into debt when your family starts to grow. Having a family can be one of the most fulfilling things you will ever experience, so take the steps in financial preparation so that you can enjoy the years of parenting that lie ahead.
About the author: Jenni Sunde is a freelance fashion writer and pop culture junkie. Jenni specializes in all things lifestyle-related. From home and design to health and beauty. With her love of art and all things beautiful, she delights in sharing her sense of style from her life to your computer monitor. Her title pegs her as an editor at a website that specializes in providing people with a quick car insurance quote, but her passion leads her into writing with a little more substance and a lot more heart.
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{ 4 comments… read them below or add one }
The very question is sort of backwards. The reason why most people (and other creatures) live is to pass on to the next generation. Kids are the priority, one of the basic needs along with eating, drinking, breathing and sleeping (and many parents will even give these up for their children).
I learned nothing from this article. Nothing. It was general, common sense information with no research, plans, lists or personal anecdotes. Waste of time.
You change this article around and say the following and take out the Baby Fund and replace with Retirement Fund; New Title should be:
Welcome to 18; You’re an Adult Now. Can You Afford to be Alive? Things to Consider Before Living any Longer!
While it’s prudent to plan financially for a child, you will never be 100% ready – not emotionally, and certainly not financially – you can always have more money saved that will make it just a little bit easier once the baby comes along. There will never be a perfect time to have a child. It’s something that you have to just commit to and hang on for the ride of your life – whether or not the piggy bank is full enough.