It’s a thrilling and somewhat scary idea when you’re starting out in life to contemplate having your own kids, and all the expense and responsibility that goes with them. For most people, it’s also an essential part of their lives, something they can’t imagine not happening to them. If you want to make the transition from care-free couple to committed parenthood, here’s how you can get ready financially for starting your family.
People are amazing at coping with what life delivers, and there are many happy, healthy children born to couples who aren’t in the best shape financially. You don’t need to be wealthy to raise your kids well, but financial stability and not having debt hanging over your head sure makes managing a home a whole lot easier.
Debt
It’s almost always best to clear debt before trying to put money aside in a savings account because what you’re earning in interest from the savings is very unlikely to be higher than the amount you’re paying out in interest on any debts. Think about clearing the debts that are charging the highest interest rates first, as they’re the ones that are costing you the most. If you can wipe out all your debt and then start putting money aside, you’ll be in a far better position to manage the extra expense of having a baby.
Insurance
You should make sure your health insurance is as comprehensive as possible, bearing in mind that you’re likely to be incurring more healthcare costs once you start thinking about trying for a baby. You should also take out a life insurance policy that takes care of your mortgage repayments in the event you’re unable to pay them. Look for the best 30-year term life insurance that covers the period of time when you’re repaying your mortgage and covering your children’s expenses through to their college years.
Work
Deciding who is going to stay at home and how long for after the birth and who’s going to be primary carer as your child grows are momentous decisions to make, and in the end, only you can decide between you what will work best for your family. What you do need to make sure of is that you’ve budgeted for the difference in income before and after the birth, and in the subsequent years. Even if you both plan to carry on with full-time careers, you’ll still need to consider funding childcare, which can be one of the most significant costs for parents to cover.
Baby costs
The amount new parents spend on all the baby paraphernalia is entirely a matter of choice; you could spend many thousands of dollars or just a few hundred and still provide everything your child needs, so don’t feel you have to spend more than you can afford on baby goods. Never economize on safety, but other than that, your baby will be just fine with whatever you can afford.
Anyone who hopes to start a family thinks about what it means for their lives, the changes it will cause and what they hope life will be like in the future, and a little financial planning will help you achieve what you wish for your family.
