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?
It’s the associated costs, right?! The time off work (esp as female breadwinner), and then childcare later on. The ‘stuff’ is chump change in comparison.
My husband and I have been contemplating this exact topic lately as we are planning on starting to try for kids at the end of this year (that’s when we’ll have reached our goal of having <$2k of debt! Woo!). We definitely don't have enough money in savings in general, let alone for a kid, but we have been putting $1k+ a month towards our debt and are planning on putting that into savings once it is all paid off, so we should have around $10k saved by the time he/she arrives.
When you say 3-6 months' worth of expenses saved, do you mean before you even start trying to have a kid or just before the baby is actually born? Are there any other things you wish you had done to prepare for kids financially? Thanks for touching on this topic!
A big one that we had to face was a second car. Before baby we were sharing a two door hatchback, and I would walk to work. Right when baby arrived I was switching jobs and would start commuting to work. We decided trying to get a baby in and out of the backseat of a two door car was not going to be very fun, so I continued to drive the hatchback and we bought the Mrs. a used, four-door car. Not only was there the initial expense of the car, but our car insurance doubled each month going forward.
I was actually just discussing this with someone over the weekend. My husband and I just had our first baby, and I’m so glad we waited until we were a bit older, and had our finances in order before we did. It’s nice to not have to stress about paying for diapers, clothes, etc. As a military family, we have Tricare health insurance which meant we had no out-of-pocket cost my entire pregnancy and birth, but I know the cost of the medication I had to take during my pregnancy would have been exorbitant, so that’s definitely something to take into consideration!