Having kids is expensive! Let’s face it; there really isn’t a full proof way of preparing financially for all the things kids are going to throw your way, but you can start preparing for the income difference before you have children. Here are a few ways of preparing for baby, financially.
Get your Debt Paid Off
If you have credit card debt, car loans, or student loans to pay, you will want to get your debt paid off before you have kids. You may always have some form of debt, and you may not be able to pay down all your student loans, but it is important to have as little debt as possible when preparing financially for kids. How to start eliminating debt is one of the questions I get asked most. I highly recommend the snowball method that Dave Ramsey teaches.
After you pay off debt, it is essential to have an emergency fund set up. For the long the term it would be great to have 6 months of expenses saved up. For example, our rent, utilities, 2 car payments, insurance, gas, and groceries for a month when we lived on in Pennsylvania last year was $3,080. That means, rounded up, we should have a minimum $18,500 saved up in an emergency fund. The best way to do that is to save money without thinking about it and have it in a separate account you don't see every day.
Next, if you don't already you need to set a budget for you and your spouse now. Keeping in mind, this WILL change with each kid you have. Once you are pregnant, you need to budget for what your baby needs, staying away from what you do NOT need for your baby.
Put $25 a Week Back into a College Fund
Preparing for kids financially is going to require quite a bit of saving, but you don’t have to save a lot. Budget yourself to $25 a week to start saving for kids. Whether your child goes to college or not, you will have a nice amount saved up after they graduate high school.
Personally, we save $25 per kid each paycheck (every 2 weeks) or $50 per kid per month. We started at $100 a month with our first 2 but weren't able to keep it up as we had more kids).
Set a Budget for Extra Curricular Activities
When you are planning for kids, it is always important to start planning your life as if you already have them. Set a budget for extracurricular activities such as baseball, football, or track uniforms. If you set your budget to take these things out before you have kids, it will be easier to adjust as your kids decide on extracurricular activities.
Before you ahev kids take the money budgeted for these activities and put it in savings. once you have kids it will be a built in buffer.
Start Stockpiling Baby Items
When you find out you’re pregnant or adopting, you may want to start stockpiling baby items. Diapers, wipes, and clothing can get super expensive, so it’s best to start stockpiling. When you don’t have pressure to buy the items, it’s a lot easier to find sales. When planning the big purchases keep in mind the 5 ways to save on baby gear and make sure to grab your 39 baby freebies!
Take on a Side job
Something else you can do to help prepare financially for kids it to take on a side job. If you can’t handle the second job due to pregnancy or other kids, then maybe your spouse would be willing. The more you can put back savings wise, the better you will be off financially when your baby comes. Remember that it is best to have a plan in place before you start having kids.
You should also realize that you won’t ever be fully financially prepared for having kids. You can do small things like pay off debt and put money back, but kids are unpredictable. If you wait for everything to be financially perfect for you to have children, you may have regrets down the road.