This is a five part blog series focused on the finan­cial aspects of hav­ing chil­dren.  Specif­i­cal­ly, the issues one should con­sid­er pri­or to bring­ing a child into a fam­i­ly.  This is part one, The “Seri­ous” Talk.  The oth­er four blogs will be pub­lished at one week intervals. 


The deci­sion to bring a child into your life is one of the biggest deci­sions that you will make in your life.  Most peo­ple will fol­low the tra­di­tion­al route to becom­ing a par­ent.  Fall in love, get mar­ried, and have a child.  For oth­ers, becom­ing a par­ent will be forced on them by Moth­er Nature.  Still oth­ers will fol­low a non-tra­di­tion­al approach and decide to become a par­ent through adop­tion.  Before mak­ing a rash deci­sion, one needs to have a very seri­ous conversation(s) with their part­ners (and them­selves) about becom­ing a parent. 

having children - the talkFirst and fore­most, why would you want to become a par­ent?  And this ques­tion applies to either mar­ried or unmar­ried indi­vid­u­als, women or men.  Regard­less of where you are in a rela­tion­ship, one needs to address and under­stand the moti­va­tion for want­i­ng to have a child.  Sec­ond, does your part­ner feel the same way?  Have the “con­ver­sa­tion”.  Prefer­ably numer­ous con­ver­sa­tions that cov­er you and your part­ners per­son­al desire and wish.  Ensur­ing both part­ners are in agree­ment and under­stand the pur­pose and intent of hav­ing a child, they then need to deter­mine if they are emo­tion­al­ly and finan­cial­ly pre­pared for parenthood. 

 You’ve had the con­ver­sa­tion; prob­a­bly sev­er­al con­ver­sa­tions.  You’ve decid­ed you are emo­tion­al­ly ready.  You are out of the hon­ey­moon phase of your rela­tion­ship and believe your rela­tion­ship will actu­al­ly work for the long haul (mean­ing you both com­mu­ni­cate, com­pro­mise, and show com­pas­sion for one anoth­er).  Then again, maybe Moth­er Nature inter­vened and in less than nine months, you will find your­self a parent. 

Regard­less of the method, adding a child to the house­hold impacts the fam­i­ly bud­get in very mea­sur­able ways.  Whether this is your first child or the fourth, here are some finan­cial mat­ters to think about and plan for before and after the baby arrives. 


Your budget WILL change

Many expens­es typ­i­cal­ly increase when you add a baby to the house­hold, including:

  • Gro­ceries (think dia­pers and wipes), baby food, maybe formula
  • Cloth­ing and baby equipment—designer out­fits or thrift store, a tricked-out stroller with Blu-ray or a gen­tly used stroller from a yard sale?
  • Trans­porta­tion costs—will you need to buy a larg­er, more prac­ti­cal, or sec­ond car?
  • Hous­ing costs—will you need to move to a larg­er apart­ment or house, renovate/add a baby’s room, or will you sim­ply need to push a van­i­ty a few feet to make room for a crib? 
  • Day care costs—location, ser­vices or your own fam­i­ly network?
  • Insur­ance costs—what changes will you need to make in your insur­ance cov­er­age; such as health­care, life, and dis­abil­i­ty insurance?
  • Legal costs—such as estate plan­ning, wills and nom­i­nat­ing a guardian
  • Future edu­ca­tion costs—pre-school? Pub­lic or pri­vate school?  Col­lege sav­ings plan?

Yes, hav­ing chil­dren costs mon­ey.  But there is good news as well in the form of reduced income taxes:

  • Extra tax exemption—if eli­gi­ble, you can file an extra exemption
  • Tax credits—you may qual­i­fy for one or more tax credits


Decide if one of you should stay home

In many rela­tion­ships, this is can be a make-or-break deci­sion.  Do both part­ners work or does one decide to stay at home?  Will it be Mom?  How about Dad?  If some­one does decide to stay at home, how long will it be until they try to re-enter the work­force?  Will they reen­ter the work­force or is this “for­ev­er”?  Are both part­ners okay with the career and finan­cial trade-off(s)? 

This is a ques­tion only you and your part­ner can answer.  Back to hav­ing anoth­er con­ver­sa­tion, right?  Before you decide, review all aspects of hav­ing a two-earn­er income vs a sin­gle income.  Maybe both of you want to work because you enjoy your jobs.  Or maybe you have no choice if the only way you can get by finan­cial­ly is for both of you to work.  Then again, the finan­cial ben­e­fits of two incomes may not be as great as you think.  Remem­ber, you may have to pay for expen­sive day care if both of you work.  You’ll also have com­mut­ing and oth­er work-relat­ed expenses. 

In order to make a ratio­nal finan­cial deci­sion, you’ll need to run the num­bers to see how much of a finan­cial ben­e­fit you real­ly get if both of you work.  Then, weigh that ben­e­fit against the peace of mind you would get from hav­ing one spouse stay home with the baby.  A com­pro­mise might be for you of you to work only part-time. 


Read Part 2 — Bud­get­ing for a Baby 

Read Part 3 — Are You Going Back to Work?

Read Part 4 — Finan­cial Plan­ning for Adop­tive Parents

Read Part 5 — Becom­ing a Step-Parent