Deciding whether or not to have a baby is probably the biggest decision you will ever make. Today we’ll discuss how to prepare financially for baby.
Stephany Kirkpatrick from LearnVest is our guest to discuss the financial aspects of having a baby.
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Having a baby doesn’t have to derail your financial goals. It does change your financial priorities. Good bye to five star resorts and hello to camping! To raise a child to age 18, it will cost nearly $250,000.
Retirement needs to stay front and center. There are more ways to fund a college education than there are to fund retirement.
You can take a loan for college but not for retirement.Tweet This
Ask around about child related expenses. What are people paying for child care, for school, for after school activities. The numbers won’t be firm but you can at least have a sense of what you’re in for.
Check into your maternity/paternity benefits. If you are lucky enough to have paid leave, and many people are not, it may not be as long as you want or need to stay out of work. You need to have money set aside to get you through a period without two incomes.
Babies need stuff, but not as much stuff as you think. And they don’t really read labels so the stuff they need doesn’t have to be top of the line.
Before the baby comes, work out what would happen if one parent decides to stay home. How can you make that work? In the long run, it may be cheaper but then one parent (usually mom) has their career track derailed. Short term savings could have long term consequences.
Can you transfer your office skills into something you can do at home? A teacher could tutor for example. Just don’t forget the tax implications for working for yourself. Working part time can be an option too. Even if you only break even financially, there are benefits to keeping one foot in the work force.
Having a baby is a big change but it doesn’t have to wreck your financial goals, just go in with both eyes open.
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