Awhile back I wrote about 6 conversations you must have before you get married, but today I wanted to write about a particular question that a lot of couples our age have: is there a right time to have a baby, financially?
While Toots and I don’t have children, I’d be crazy to think that we won’t eventually have a few miniature gingers running around the house. For those of you that don’t know me personally, this is a groundbreaking realization as kids weren’t anywhere on the radar when we first met 7 years ago.
Having coached hundreds of parents and having a myriad of friends that have babies, I have a fairly good grasp of the financial implications that bringing a baby into the world entails:
Oh yeah, one must not forget that these little tots eventually grow up. When that happens then we’re talking about more clothes, sports expenses, camps, maybe private school, and even college!
While reports vary, I used a handy calculator at BabyCenter.com, and they were quickly able to estimate that the cost of raising a child is around $300,000 if your baby was to be born within the next year.
Wow! Three hundred THOUSAND dollars.
While I realize these numbers can be disputed and will vary based on each household’s unique financial situation, the reality is that babies and children cost a lot of money. Especially if you want to pay for their college education.
I know families that were strapped for cash, had piles of debt, and couldn’t manage money well. Despite their strenuous financial situation, they each decided that having a baby was right for them.
Is there anything wrong with that? Absolutely not! I’m not here to tell anybody that there is “technically” a right time to have a baby, financially. But what I can tell you is:
The better shape you’re in financially, the more likely it is that you’ll be able to provide some of the blessings that having a strong financial foundation provides.
Wow, I know…earth-shattering stuff there.
Does that mean the baby is loved more by a family that has a good financial footing before having one? No. Does it mean your baby is going to love you more? Probably not. Does that mean your baby will be worse off or that you shouldn’t have a baby just because you may not be able to provide them all of the worldly luxuries? No.
Having a rainy day fund is important regardless if you have a baby or are planning on having one in the near future. However, if you’ve been unable to save consistently, then you have to ask yourself whether or not you can truly afford the additional expenses that a baby brings with it.
We currently have $2,500 saved in our emergency fund. While I’d like for that to be more, I think that could handle most medical emergencies or issues we’d have with a baby (while taking into account our insurance).
While I’m not suggesting that a baby costs an additional $1,000/month (especially as an infant), I’d personally like to be able to ensure that we can cover all of the baby’s costs while still being able to save money in a high yield online savings account, pay down debt, and/or save for retirement.
Furthermore, if my wife would want to be a stay-at-home mom, the disposable income would need to be greater as we’d lose her income. If she continued to work, then we’d have the eventual, absurd cost, of a day care facility. From the rates I’ve seen, that can range anywhere from $700-1200/month!
I’d NEVER tell somebody that has debt that they shouldn’t have a baby. However, if you’re determining the right time to have a baby financially, then having debt may be a huge hurdle that stands in the way of you being able to provide for your child.
For us, we have $500/month in minimum student loan payments. While we’ve paid off $60,000 worth of debt over the past 5 years, we still have a ways to go and eliminating that debt will go a long way to helping our disposable income.
For us, the right time to have a baby will also coincide with accomplishing some of our personal goals. This won’t be the case for everybody, but Toots and I have spent years climbing from underneath the pile of debt we’ve created. In doing so, we’ve neglected many of our personal goals and many of those involve traveling the world.
Having a baby would make it more difficult to travel and save for an expensive vacation, and that’s something we want to accomplish before our lives change forever.
Every person and situation is different. Some men/women out there feel called to have children at an early age and desire nothing more than starting a family. However, on the other hand, there is nothing wrong with wanting to wait to have children.
Determining the right time to have a baby is different for every couple. However, if you’re wondering when the right time might be financially, then having an emergency fund, understanding the principles of budgeting and having a decent disposable income, and being debt free may all be factors you consider.
Did you give any thought to the financial side of things before you had children? If you’ve yet to have kids, is it simply because you’re waiting to get your finances in order?
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