Planning a family is exciting. Beside the actual, um, creation of the children, there’re thoughts about having a boy or girl, how you’ll educate them, what they’ll be when they grow up, and how they’ll provide for you when you’re old and grey. They’re great topics; however, in many cases they crowd out the most important question for you and your partner … Are you ready to start a family?
Many people answer “Sure” to this question without blinking an eye. Unfortunately, these are the ones who aren’t ready. What they thought would be a perfect life once the child was born turns into a financial nightmare fraught with stress, arguments, and the potential separation between you and your partner. Yes, the idea of having children is free, but the cost to take care of them is far from it.
So, we ask the question … Are you ready to start a young family? Here are a few things to consider.
Do you have debt?
Regardless if it’s one credit card or thousands of dollars of student loans, debt of any size puts undue pressure on a pair of new parents. And as the costs of child-rearing mount, the concrete ceiling of debt can close in, suffocating you and preventing you from enjoying your child. Starting a family should be the furthest thing from a pair’s mind if they have debt. This should be taken care of first and foremost.
Do you have an emergency fund?
What happens, after your child is born, if you get let go from your job? Or your partner wants to stay home to raise the child? Or there’s a complication after the birth which requires surgery or additional treatments for both mother and child? Do you have the money at this moment to address these expenses? Financial experts recommend an emergency fund of three to six months of basic expenses to handle unforeseen circumstances. Basic expenses include food, clothing, utilities, mortgage or rent, and transportation. This should be in place right after debt is paid off and long before having a child is considered.
Are you invested?
In this case, we mean both financially and personally. On the financial side, you need to look at the cash you have invested in your work’s retirement fund, IRAs or mutual funds. Of course, this is after you pay off your debt and set up an emergency fund. You also want to look at investing options for your new child when it comes to higher education.
On the personal side, you and your partner need to look deep inside your souls to determine if you’re ready to invest the time and energy to raising a child. You could be debt-free, have a one-year emergency fund, and have several million dollars in the bank. However, if you’re not mentally ready to start a family, all the riches in the world will be moot.