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By Anne Purcell
The not-so-great part about amazing life events – the finances that are associated with them. Marriage, buying a house and having children all cost money. And while you can't always anticipate significant life changes, there are times when you can start planning for them before they occur.
If you are thinking of growing your family, you may also be thinking about how a little person might affect your family’s financial situation. With the cost of living continuously rising with inflation, even without kids, it is rational to wonder how far your paychecks will stretch if you want to bring another person into your life to support. While there isn't a way to avoid the increased costs of growing your family, there are ways to prepare for them.
While you can't anticipate all costs pertaining to having a child, there are a few larger ones that you should be aware of, specifically the cost of having or adopting a child in the first place. Even with insurance, you may still find yourself with a bill costing a couple thousand dollars when you leave the hospital. While that may not seem like much after holding your new baby, it is still a good idea to reach out to your insurance and get an estimate on your anticipated costs before your child’s birth or research adoption costs, to help prepare yourself and your wallet for it. Adoption costs can range anywhere from less than $1,000 to more than $50,000.
When having a baby, you will need to purchase many necessary items before bringing the child home, such as a crib, car seat, stroller and diapers, to name a few. These products often have options that range drastically in quality and price. Do your research online or ask for recommendations from people in your life on what you should splurge on and what you should save on. Buying second-hand is another way to help cut down on costs. In the interest of safety, there are some items that you should not buy used. You should always check the U.S. Consumer Product Safety Commission website for any gear that might be recalled but especially check for cribs and car seats since there are so many added safety considerations.
If you currently have a set monthly budget, looking at it and adjusting for new spending is necessary if you are welcoming a little one. Some things that you may have to adjust your budget for are an increase in grocery bills and childcare costs. Sitting down and outlining all your necessary accounts, from your mortgage and car payments to daycare and groceries, can help you better understand where you are spending your money and whether you can adjust specific areas of spend if need be.
Life happens, and while it is impossible to know exactly when something bad could happen, setting aside some money just in case can help offset any unplanned bills that may occur, especially when you have a kid. An emergency savings fund can come in handy during job loss, unexpected medical bills or home and car repairs you weren't expecting. Including an emergency fund in your regular budget will give you an extra cushion if something goes wrong.
Having an emergency fund set up before having kids helps provide some financial comfort if something happens to your child and for you as well.
It is never too early or too late to open a savings account for your child. Opening a kids savings account at birth can be a good place to store any checks or cash your child receives from grandparents, family members or friends at birth or birthday parties later on.
Setting up an account like this early will benefit your child in the long run. With a savings account, your baby can passively earn money on gifted cash before they even understand the value of a dollar. This will not only help set your baby up for financial success later in life, but as they grow, the account will be an excellent way to start teaching your child about saving and spending money.
Growing your family is exciting, but understanding the financial implications is necessary. By doing your research, adjusting your budget and preparing yourself for both the unknown and the known, you can enjoy the time with your little one with less stress around finances.
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