When to Start Planning for a Family

couple starting a family

Starting a family is a decision that requires some careful considerations, including thinking about any career issues that might arise and assessing your emotional readiness. During the planning process, getting your finances in order is a good first step.

Having a child can be costly. According to a U.S. Department of Agriculture report, parents spend nearly $14,000 a year on child-rearing expenses. A survey by Babycenter.com showed three in five women were worried about being able to afford raising a child into adulthood. Below you’ll find four finance-related parenting issues to consider.

1. Childcare

Childcare costs can be high, although with some research you should be able to find an option that fits your budget. The potential choices include employer daycare or discounts toward childcare, or a nanny-share with other families. Don’t be shy about embracing help from family members.

Many couples decide they’re ready for a baby when one or both have reached a plateau in their careers or are ready for a break. If finances allow, one parent may decide to take on full- or part-time childcare duties or switch off with the other parent by altering work schedules, which will offset childcare costs. You should also check on parental leave policies from your employer, which may allow you to take a set number of weeks off at a percentage of your pay.

2. Safe and secure

When your baby arrives, he or she will need healthcare coverage from the start. Review your healthcare policy and benefits to see if your current plan sufficiently covers parents’ and children’s needs and is cost efficient.

If you rely solely on public transportation or get around in a two-seat sports car, you may need a reliable vehicle that safely accommodates a child seat for all those trips to the pediatrician and daycare center. Likewise, your living quarters may be perfectly adequate for two adults but may require renovating to make a safe space for a nursery and all the belongings a baby needs. Or you may need to move. Are you okay with these changes?

3. Daily expenses

Consider your household budget and determine how much in additional expenditures it can absorb. The daily costs of caring for a baby can add up quickly, including diapers, formula, baby food, clothes and all the other accessories. That’s not to mention larger, less-frequent purchases such as a crib, car seat, stroller and highchair.

Your shopping habits might need to change as well. Sticking to a budget means resisting impulse buys like a cute baby outfit or toy you don’t need. It can all be part of a larger lifestyle change for which you may not be ready. For instance, instead of frequenting that pricey market, you may need to switch to shopping at a warehouse club for bulk items or a thrift store for secondhand clothes.

4. Document review

If you’re thinking of starting a family, start saving immediately — even small amounts. A nest egg of savings will help lessen the factor money plays in your decision and let you focus more on the personal and life-enriching aspects of having a baby. You’ll also be in a better position to achieve goals that are planned (like a larger home) and those that pop up along the way (like a family vacation).

At the same time, adding a dependent to your family means you need to review or create wills, guardianship rules, retirement plans and life insurance policies. It’s important to update these documents to keep your baby protected from the start and throughout his or her childhood.

Life insurance is most important when you need to protect the financial security of your loved ones and dependents. Learn about different types of life insurance to get the best coverage for your circumstances.

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