One of the biggest considerations when it comes to starting a family is finances. It’s not that children cost all that much initially. Even three and a half years in to having children, we’re still not spending very much on them (sorry, girls!). I think in food consumed, our cat is almost on par with our two little toddlers. But having children can cause other external factors to change your finances. Maybe one spouse switches from full-time to part-time work — or even decides to quit working entirely. Or if both spouses continue working, childcare becomes a very large expense, sometime equal to or larger than a mortgage or rental payment.
But finances aren’t the only consideration at play when starting a family, which makes the decision tricky. The desire to have children at a certain age or the not knowing how long it will take to become pregnant are both other, very personal factors at play. But when is your budget ready? When can you definitively say, If nothing else, at least our budget is ready for all those diaper changes!
Well, before we get there, I think one thing that surprised Johnny and me most about becoming new parents was the extra stress that entered our lives. The moment we met our first baby was the happiest, most meaningful moment of our lives, but the lack of sleep and lack of time that ensued, as well as the adjustment of devoting everything to our new baby was surprisingly stressful. I can only imagine how we would have felt if our finances had also been causing stress. Four months into new parenthood, Johnny was laid off from his job, which we couldn’t have foreseen, and despite our fully-funded emergency fund and my full-time job, it was still stressful. All of this is to say that finances are an important consideration. And if you’re reading this, you’re probably rolling your eyes and saying, Yeah, we get it already!
So on to the good stuff. Here are a few questions we asked ourselves and that we think could help in deciding on a timeline for starting a family:
Are we on a path to debt-freedom?
While it’s not necessary to be debt-free before having children, you should have a plan for becoming debt-free, and be on an active path of paying off debt, especially consumer debt.
Do we have a fully-funded emergency fund?
What does “fully-funded” even mean? Here’s a post all about it, but in short, do you have three to six months’ worth of expenses saved up?
How much will it cost for us to have a baby?
How much will your health insurance cover, and what will you be responsible for? What is your deductible and max out-of-pocket, and are you prepared to pay it if your baby has an extended hospital stay?
How will our finances change once we have a baby?
Will we both keep working? Will one of us stop working altogether? Who will care for our baby if we’re both working, and how much will it cost?
Deciding to start a family is based on many factors, including that the timing “just feels right.” But having your finances in check can help with the decision and bring a sense of peace and security. For those of you who have already entered the wide, crazy world of parenthood, what were some of your financial considerations before having a baby?