Financially Preparing For A Child

August 9, 2019

© Catalina Zaharescu Tiensuu | Dreamstime

It costs an estimated $233,610 to raise a child through age 17, according to government data. It’s no wonder that some couples are second-guessing on when to start a family.  The truth is, you're never really financially ready to raise a child (or children). A recent survey found that 42% of parents were nowhere ready financially prepared to have a child but before you hyperventilate into delaying your family, financial experts offer some guidance on preparing for the cost of raising a child. Before you start bookmarking baby name ideas, take a look at your current budget and your emergency fund. Do you have three-to-six months of expenses stashed away? Can you increase the amount you’re saving each month, to make adjusting your budget easier when post-baby expenses like childcare become more tangible? If your emergency fund is flush, then focus on paying down debt like credit cards or personal loans. Think of it this way: If your debt stresses you out now, imagine how it might weigh on you when you’re caring for a child. That money you put toward your debt could be put towards the care and feeding of your kid. If your emergency fund is healthy and you don’t have debt, then it’s time to increase your retirement savings. To use an old personal finance rule of thumb, “You can take out loans for education, but you can’t get a loan to pay for your retirement.” Just by increasing your retirement savings by 1% can put you on better financial footing for the future. Once you feel comfortable in these three areas, you can think about some of the many baby-preparation costs you’ll face, from health insurance to life insurance to considering how your income may change when a child arrives.

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SOURCE: Lifehacker

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