Having and raising children is one of those joys in life but raising children does come with quite a large price tag. Usually, we hear that buying a home is the largest expense that we will take on but raising a couple of children can actually exceed that for many people, especially when you factor in the price of education.
However, like most financial decisions, you might want to get everything in order before you decide to have children. Here is a look at money milestones that you should hit before you have kids.
Have a Stable Career
It is vital that you have a secure work situation before you have children. This could be traditional employment, self-employment or a combination of both. You will want to have an established foundation that will be able to support your growing family.
You need to think about the career paths that you can continue on once you have a child and careers that offer a salary that is adequate to cover the expenses of a child as well as your other expenses.
The salary from a job is important, but also look at other benefits like healthcare, maternity/paternity leave, the sick leave or personal leave policy and other such things. After all, you don’t want to have to take a day off to care for a sick child and then find out that you don’t get paid for that day.
Your Disposable Income
The fact is raising just one child is expensive, so you will need to do some calculations so that you can get a better idea of how much a child would cost each year. You can use online calculators to do this. This will determine if you have enough room in your budget to have a child before all the expenses start rolling in.
Making these calculations will give you an idea of how much your disposable income will need to be allocated to raising a child. You can even plan in advance and save up a year or more of these estimated costs so that you are ready to have a child and be able to afford it.
Wait…Here are some more financial milestones…
Create an Emergency Fund
Parenting is an adventure and you can never know what may happen, but it pays to be prepared financially for any unexpected event. Having an emergency fund in place is a true necessity when you have children.
Your emergency fund should be at least three to six months of expenses so that when life’s messes arise like a broken leg or your teens first fender bender, you and your family are protected.
Save for Retirement Before
As children get older, the expenses for them also increases. You should then make sure that you are able to save for retirement before you have a child. Saving for your retirement is solely your responsibility, so being able to contribute to your retirement fund before you have kids helps to secure your future and relieves your children from the financial burden of having to care of you when you are older.
Make Sure You Can Save for Education
Education and especially university is expensive and the cost continues to rise. Many students have to take on a student loan, but these are pricey and can see your child being in debt for years to come.
You are able to relieve the financial burden of education for you and your future children by saving. You need to ensure that you are in a position to save for your kids’ education from the moment they are born or even before so at least by the time they are ready for university, you will be able to pay for it.
If you are not able to save the full amount then you can part pay and perhaps take a personal loan for the rest, that you are able to afford to pay each month. The interest rates on personal loans are lower than other loan types and are flexible in terms of the repayment periods.
Don’t panic if you can’t hit these milestones…
These milestones are of course the best-case scenario, but just because you are not able to hit all of these it doesn’t mean you shouldn’t have children or that you will face financial ruin if you do.
It is best to have a financial plan in place before you have kids, but there are a number of financial products that can help you on your journey when you are raising children. You can consider getting a personal loan for educational purposes provided that you can repay the payments or you can use a loan to pay for an unexpected emergency and pay it back over a few months and so on.
After all, sometimes the best laid plans don’t go the way you want them to and you might not be able to plan right down to the second of when you will have kids. Just be aware of the costs involved and see what you are able to achieve and discover ways that you can reduce your financial worries.