This is a guest post by Valerie Rohde and it's super-timely since we just had a baby. – Anna
I hear this question a lot and I’ve asked it myself many times before our journey to becoming parents. I’ll tell you straight out, I don’t think there is ever a time where everything will necessarily line up just perfectly on the way to parenthood, whether it’s financially, emotionally, or physically! But there sure are some steps you can take ahead of time to ensure you are in the best position possible to welcome a new little one into your life. Making sure you are honest with yourself and your spouse about your financial situation is essential in making a solid plan, budget, and setting goals when discussing expanding your family. If you have a financial plan moving forward and have budgeted for the extra costs that inevitably come along with pregnancy, birth, and a new baby I would say you’re off to a pretty good start. It would certainly be nice if we could all be completely debt-free going into expanding our families but in order to be realistic I have come up with some important considerations for parents-to-be whether you are already pregnant, thinking about trying in the future, or are already in the midst of trying to conceive:
How to Know When You’re Financially Ready to Have a Baby… Get out of Debt NOW
Don’t wait until baby gets here to decide you want to be serious about getting out of debt so you can be a stay-at-home parent immediately after your little one is born. If you’re already in debt, start making every effort to get out before baby gets here because once your little bundle of joy arrives you will want nothing more than to spend your time with your family, not out delivering pizzas for extra money. Take the extra time you’ve got now and be creative with it, and throw every bit of extra income toward paying off your debts. Sure, before you have kids it’s okay to be selfish and buy yourself something nice, BUT how much nicer will it be to get that debt paid off and be able to spend the way you want buying all those cute baby items! (Take the Get Out of Debt Pledge!)
Savings Accounts
This one is a gimme! Everyone has probably heard you should have “X amount” of money in the bank before you have a baby. Ideally, you would be financially secure and have at least an emergency fund set aside so that you don’t have to go further in debt once baby arrives. I think you should absolutely continue to strive to be building your savings and paying yourself from every paycheck before you pay your debtors even if it is only a small amount. A little adds up over time, especially in a savings account that can accrue interest over time. I suggest the Capital One 360 (Note from Anna: this is not an endorsement) account because you can create sub-accounts that you can designate for family and baby-specific funds such as baby’s savings (to put their money from Christmas and birthdays over the years), family vacations, family outings, savings for baby #2, and anything else you can think of!
Term life Insurance
Seriously? That doesn’t sound like much fun does it? But it is so very important to consider when you think about providing for your family and leaving a legacy beyond yourself should the situation arise prematurely. Term life insurance provides coverage at a fixed rate for the term you choose and term life insurance is so affordable it really shouldn’t be overlooked. You can get some great quotes quickly and easily from Zander insurance (Note from Anna: this is not an endorsement). They will quickly shop for the best price and you can either choose to use that provider or check with your current home or auto insurance provider to see if you can get a deeper discount by getting term life insurance through them.
Last Will, Living Will, and Power of Attorney
Okay, another consideration that is ALL BUSINESS. But again, so important for your family and also inexpensive as it is a one-time cost. USLegalForms and Legal Zoom have some excellent packages to choose from that will make your experience a breeze. When expanding your family it is more important than ever to make sure you make it clearly known who will be the care provider for your children should anything happen prematurely to you and your spouse, otherwise, it is up to the state to make these very personal decisions and you don’t want your loved ones to have to be left with struggling to help fight for the decision you could have easily directed for them. So again, while the stars may not align perfectly for you financially on your journey to parenthood there are steps you can take to ensure your financial future is bright and that you can provide more for your children than you ever dreamed. Providing a financially secure household without the stress of debt, as well as teaching your children about how to handle money from an early age, is seriously one of the best and longest lasting gifts you can give to your children. (Anna and her husband, Aaron, recently met with a Wills and Trusts attorney. Read the post here: A Cringe-Worthy but Necessary Meeting with a Wills and Trusts Attorney)
What financial preparations did you make when getting ready for a baby to join your family?
Valerie Rohde is a wife, new mom to an almost one-year-old, and a childbirth doula working toward certification. She has a full-time “day job” on top of the many other hats she wears while she and her husband are working hard toward becoming financially free of old debts and student loans. She is currently working toward her doula certification as well as becoming a childbirth educator and lactation consultant. She has an intrinsic love for writing and has just begun chronicling her family’s financial journey at Taking the Rohde Less Traveled as well as her more personal journey to parenthood here.