The following post is by MPFJ staff writer, Laurie Blank. Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.
With the latest reports stating that it costs nearly $250,000 to raise a kid, it might be a good idea to have your money situation in order before you think about having kids. It also might be a good idea to get your money situation in order if you already have kids.
I should start off by saying that we didn’t start getting our money in order until the oldest of our four kids turned thirteen years old. I share this to encourage those starting late: it’s never too late to start getting your money together.
I remember having a talk with our oldest one time, expressing remorse and regret that all of her years as a child had been watching us struggle for money. I didn’t want to give her that same experience that I had as a child; one where money had been a constant source of fear because we never had enough growing up. Yet my husband and I fell into the same path with our kids that our parents fell into with us. A lack of education about personal finance had been passed down throughout the generations.
Oldest daughter answered my regrets with the heart of a champion. “Mom, what matters is that you are getting it together now. Even if it takes ten years to get out of debt, at least you’re getting out. You can spoil us then.”
Kids are resilient. They often have a wisdom that adults lose in the face of trying circumstances. It’s for them that we’re working on achieving the money milestones that are best in place before kids arrive on the scene. Here are four of my favorite money milestones that you might want to think about achieving before you have kids.
Get Your Debt Situation in Order
A best case scenario would be zero consumer debt (and a commitment to stay that way) and a very manageable mortgage (say, 25-30% of the primary income earner’s take home pay). When we had our first baby, both Rick and I were working. I had a great job: part-time, they allowed me to work from home and I made really good money.
I thought I’d work forever, but after kid number two came along I really had a heart to stay home and manage the kids and the house full-time. Kid number two had a minor but time-intensive medical condition for the first year of her life that left me wanting time to care for her more than I wanted money.
I got laid off in a group layoff at my company when kid number two was 9 months old, and we chose for me to stay home, but money was tight due to our debt situation. We had borrowed based on two incomes. If we had to do it over again we would’ve bought a house based on hubby’s income alone and avoided consumer debt altogether.
Be Contributing to Retirement Accounts Consistently
“I haven’t arrived, but I’ve left” is a good motto when it comes to combining retirement planning and kid-raising. It’s not necessary to be fully prepared for retirement, but it’s a good idea to be consistently contributing to either a 401(k) or an IRA of some sort. It’s tempting to stop saving for retirement during the kid-raising years so you can be sure to have money to cover kid expenses, but you’ll thank yourself if you keep saving for retirement because then your kids won’t have to help support you financially during retirement years.
Make Saving a Habit
A plush emergency savings fund is always a good idea, but even more so when you’ve got kids. All expenses double and triple when you add additional family members, so it’s a good idea to set aside a specific percentage of your paycheck into a savings account that can cover a new car need, an expensive bill or repair, or that can carry your family through during an unexpected reduction in income such as a job layoff. It’s also a good idea to carry a sizeable life insurance policy if you don’t have enough money saved to be considered self-insured in your own eyes.
Have a College Savings Plan
College costs and student loan debt numbers are rising every single year. If you’re having a baby, it’s a smart idea to research the different college savings plans available in your state and to have a plan in place for how much you’re going to contribute to your child’s college education and to work that number into a monthly amount that you can include in your budget as early as possible. Time flies even faster when kids come along. It’s a wonderfully, beautifully hectic life where one day you’ll be bringing your kid home from the hospital and then next you’ll be teaching him or her to drive.
If you get a college savings plan in place sooner rather than later, you’ll lessen the financial burden of college on yourself and on your kids.
How about you all? What money milestones do you think are important to have in place before kids come along?
Share your experiences by commenting below!
***Photo courtesy https://www.flickr.com/photos/digitalsextant/29908738/
