If you’re wondering, “Am I financially ready for a baby?”, I’ve got an honest answer for you: You’re probably never going to be 100% ready for a baby.
Babies change everything in ways you can’t even comprehend until you have one. But babies are such a blessing!
And of course, babies often just come anyway without you planning for them to show up.
But if you’re not currently expecting and are considering your future, here are some questions to think about as you determine if you’re not financially ready to add a baby to your family.
Even if you’re already expecting, these questions should help you make a solid plan as you prepare for your little one.
Am I Financially Ready for a Baby?
How much money should you have before you have a baby?
There’s no specific number to shoot for here, but it is important to have at least some money saved. Most financial experts recommended an emergency fund that covers 3 to 6 months’ worth of necessary expenses (if you don’t have anything get started with your first $1000).
This emergency fund can cover you in case you need to or want to take time off work after the birth of your baby, but also in case there are any unexpected medical expenses or other expenditures you need to cover.
Even beyond the birth of your baby, an emergency fund will help you pay for any surprises that might pop up, whether it’s related to your child or not.
What’s my job situation?
As with savings, you don’t need to have a certain income to be ready for a baby, but you should consider your job’s stability. Having another person to support – especially one that can’t provide for themselves – is a big responsibility.
It’s best to have a full-time job – preferably with benefits – before having a baby. This should provide a significant enough income for paying the bills, and health insurance (or an alternative like Medi-Share) will help cover pregnancy visits and your hospital experience.
Also, consider your maternity or paternity leave. Paid parental leave is not a universal practice in the United States, but you’re probably covered by the Family and Medical Leave Act (FMLA).
Under FMLA, eligible employees are allowed to take up to 12 weeks of unpaid leave within the first year of their baby’s life. During this time, your job is protected, and you are still covered under your employer’s health insurance.
Of course, if your employer offers paid parental leave, awesome! Be sure to check with your human resources department to confirm exactly what benefits and leave are available to you.
Beyond leave, you’ll also need to consider your childcare situation. Is one parent going to stay home with the baby? If you’re in a two-parent situation and both parents are going back to work, how will you cover childcare?
Will you work opposite shifts, find a friend or relative to watch the baby, or pay for daycare? There’s no one right answer, but it is something you need to consider as childcare can be a significant expense.
If you decide to have one parent stay home with the baby, I recommend that you begin living off one income as soon as possible to get used to your new financial situation.
This will also allow you to pay off debt with the other parent’s income and/or rack up some significant savings as you prepare for your baby.
What steps am I taking toward debt payment and planning for retirement?
You don’t need to be 100% debt-free to be financially ready to have a baby, but you should be committed to paying down and paying off your debt. Getting your debt payments under control is important for your family’s stability.
As for retirement savings and investing, you don’t have to have a fully-funded Roth IRA each year, but you should be contributing to retirement as much as possible once your debt is paid off.
The sooner you get started saving for retirement, the better. If you’re considering having a baby, chances are you’re on the younger end of adulthood with lots of time to grow your accounts. But that money won’t grow if it’s not there.
Can I afford a baby?
How do you know if you’re financially ready for a child?
You’ve probably read about how having children is super expensive with some ridiculous number like they’ll each cost you $200,000 over the course of their childhood.
Here’s the thing: having a baby doesn’t have to be super expensive. Don’t fall for the marketing hype that babies need everything. Their needs are simple at first: a place to sleep, a source of food, clothes, and diapers.
There will, of course, be other expenses like increased health insurance premiums, possibly a larger and more expensive house, and eventually extra money spent on utilities, clothing, and food.
But remember that it’s likely that your income will increase over the course of time as your child grows. You’ll be able to add to your savings, including an education account for your child if you so choose, while your baby is growing up.
If you don’t already track your finances and have a method that keeps you accountable, you’ll want to get started with that ASAP. When you have a baby to care for, you won’t have as much disposable income as you do now.
A budget helps you get used to planning where your money goes, so when regular expenses come along (like childcare), you’ll know how to fit them in.
Don’t worry – you don’t need to have your budget figured out for the next eighteen years. You just need to have a solid foundation of a budget that you can adjust as your income and expenses change. (Grab our sheet here.)
Is there ever a perfect time to have a baby?
If you wait for the “perfect” time to have a baby, you’ll be waiting a long time.
But you can ask yourself these questions before having a baby to help you make financial choices that will help your situation when a baby comes along.