Your Personal Financial Checklist Before Starting a Family

Starting a family is one of life’s greatest joys. However, it’s also true that raising kids these days isn’t as simple as it was, say, during your grandparents’ time.

Today, parents need to prepare for different types of financial challenges brought on by local and global economic uncertainties. The need to be competitive in an increasingly globalised job market, high unemployment rates, and housing and healthcare costs all add to the pressure of everyday living.

With the cost of raising a child in the U.S. until age 18 projected to cost middle-income couples close to a staggering $300,000, deciding to have a child requires careful planning.

So, are you wondering whether you’re ready to take on the financial responsibilities that come with starting a family? A leading provider of life insurance in New Zealand says anyone planning to have kids should consider doing the following first.

1. Conduct a debt inventory

How much do you have in total as debt, particularly credit card debt? Are you able to make regular payments? Have you significantly brought down your balance?

Taking stock of your IOUs will give you a clear picture of where you stand financially. As much as possible, strive to clear most, if not all, of your debts prior to starting a family. By having a clean financial slate, it can be easer to tackle expenses and surprises that may arise.

2. Start saving in earnest

Just having savings is not enough. You need to be setting aside money to cover the costs of childcare and education.

With more and more families being unable to help their kids complete their college education and some parents still trapped themselves in the U.S. student loan problem, planning and saving now is a crucial decision you have to make.

Set up a goal savings amount by considering your priorities. Do you plan to send your kids to private school? How many children do you want to have? Would you need to move to a bigger house? Are both you and your partner going to work full time or will one of you take over child-minding? How much would day care cost if both of you need to work? These questions should guide you in coming up with a realistic figure you and your partner should save towards.

3. Review your health insurance, wills and other family documents

You need to ensure your medical coverage is sufficient to meet the needs of your growing family. Review your policy with your provider and check the benefits. Make sure your plan takes into consideration you and your partner’s needs, as well as your future children so the whole family is protected.

You should also use this time to review your wills or get these done if you don’t have any. What are your retirement plans? Are you saving for retirement too?

4. Allocate a budget for baby proofing and childcare expenses

Having a baby requires you to budget for baby-proofing your home, setting up a nursery and shopping for baby supplies. You might even need to get a child-friendly vehicle for the safety of your little one.

Remember that there’ll be this whole other new little person in your family. You need to spend on their formula, vitamins, diapers, feeding bottles, clothes, baby carriage, baby care products and other items. To save on costs, you can ask friends and family to share usable baby supplies with you, especially clothes that your child will outgrow quickly.

Steel yourself from temptations. Don’t be tempted to buy every little thing you see for your baby, no matter how cute it is. Rather, put that money toward your child’s college fund.

5. Check your eligibility for government programs to help cover childcare expenses

Speak to your accountant or financial advisor about which government programs you qualify for, such as tax awards and pre-tax options designed to help you cover the costs of childcare. Talk about whether the Dependent Care FSA or the Child Care and Dependent Care Tax Credit is the more feasible option for you.

Starting a family is a complicated matter.

However, by preparing financially way ahead of time, you can look forward to a wonderful future for you and your children.