Are You Financially Ready to Have Kids?

Sarah Danielson writes for a retirement savings plan website where you can find tips and advice on eligibility, investing, and establishing goals for your future.

Perhaps a better question is: will you ever be ready?  Kids are expensive, in case you didn’t know.  Statistics keep changing, but people generally seem to agree that the cost of raising a child to the age of 18 is approximately $200,000.  Ouch!  And that’s before they even go to college (or continue to live on your couch rent-free…well, don’t worry about that yet).  The point is, most people who plan to have a child (or several) don’t have that many Gs on reserve.  Does that mean they shouldn’t start trying to conceive?  Absolutely not!  And yet, there are several financial factors that you’ll want to have in place before you bring home your little bundle of joy.  Here are a few ways to determine if you’re financially ready to have kids or if you need to get a baby fund in the works.

First of all, you’re going to need a stable job with good insurance. 

The largest initial expense of having a baby is the hospital bill, and you’re going to have to pay some of it, no matter how phenomenal your insurance policy is.  Hopefully you have a plan that will pay for at least 80%, so beyond that you’ll only need to have a couple thousand dollars on hand for medical bills (barring any extreme circumstances).  This leads to the next item on your fiduciary list: a savings account.  And it goes right along with your earnings.

You want to take a long, hard look at what you make, what you save, and what you spend before you put a bun in the oven. 

If you’re spending almost 100% of your earnings on bills, you may want to either rethink your budget, or else your decision to get pregnant.  Not only is one of your incomes going to be on hold (at least temporarily) for maternity leave, netting you less cash than normal for several weeks (at the least), but a child is going to jack up your expenses significantly.

Infants outgrow clothes within weeks, they’re going to need a lot of medical care in the first few months (immunizations, doctor visits, etc.), and diapers alone will cost you approximately $2,000 for the first year alone (although cloth diapers can be a cheaper alternative).  So you should not only make sure you have the excess income to budget for these additional expenditures, you should also try to get a nest egg in place to deal with unexpected costs (which are bound to pop up).

Having a baby can (and should) be a joyful experience. 

But it can be severely dampened by monetary woes if you don’t plan ahead.  Ensuring that you’re prepared requires that you get your career on track first (no, working at a convenience store does not count as a career track unless you’re at least a manager), obtaining comprehensive health insurance (as in, it will cover your kids), creating a budget that provides for excess cash, and setting up a substantial savings account.  By taking the proper steps, you can definitely be financially ready when your baby arrives (even without 200 large in the bank), reducing your stress level so that all of your attention can be focused where it should be: on your newest family member.