6 money questions to ask yourself before you decide to have kids
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A few years ago, no more than two months into my first post-college job, my mom informed me I would need to bring something to Thanksgiving dinner.
Only one rent check into living on my own, I didn't feel "adult" enough for such a request.
Several apartments and rent checks later, I found myself surrounded by doorknobs in the middle of my local home improvement store.
After a ridiculous amount of time comparing locks and finishes, I left with my wallet $400 lighter. My first thought: Since when did am I "adult" enough to buy doorknobs?
I can pinpoint these memories dotted throughout my 20s, in which adulthood was no longer someday but right now, in all of its responsibility-entrenched glory. Age and logic don't make adulthood feel like a friend I'm comfortable with. Instead, it still feels like an awkward second-cousin I'm not sure how to interact with.
So, as I prepare for my upcoming wedding, I'm bracing for the next "Am I adult enough?" venture: starting a family.
My age makes this an obvious next step, but I'm an over-planner and triple-checker. I want to know the shape and size of the bumps in the road before I begin every journey. I want to know I've packed enough food and emergency supplies for a blizzard — even if it's in the dead of summer.
Yes, I know having kids doesn't work this way.
But at least I can answer these questions to know if now is as good a time as any to take the major adult leap into parenthood.
Is my emergency fund in good standing?
An emergency fund is always necessary. But the need for an emergency fund at this stage of the game is two-fold: to cover any unexpected expenses possible with a new baby, and to serve as a buffer for any income not offered by your employer during maternity leave.
Under the Family and Medical Leave Act (FMLA), employers in the United States are required to offer 12 weeks of unpaid maternity leave if:
- You've worked for the company at least 12 months or 1,250 hours over the past 12 months.
- You work where the company has at least 50 employees within 75 miles.
However, because this is unpaid leave, the only requirements of the company are that they provide:
- Medical care while you're on leave
- A job upon your return
Any compensation offered during this time is up to the discretion of your employer.
As a freelancer not covered by FMLA, with no guarantee of work post-leave, an emergency fund of 6-12 months becomes even more essential. Not only will this cover the potential loss of income during this time, but it can help cover unexpected expenses that would otherwise become debt. Even if your employer offers some compensation during your maternity leave, a cushion can lessen stress during an already stressful time.
Another option to bridge the income gap is short-term disability insurance, which pays a portion of your salary for a predetermined amount of time. But it's important to note that the policy must be established before you or your partner become pregnant.
Your employer might provide short-term disability under your insurance umbrella. Make sure to do your research to better understand what's available to you.
Am I stable in my career?
Stability is a tricky thing. My last position was certainly stable, but not fulfilling. After trudging through one particularly painful year, I traded in the steady paycheck and opted for freelance life instead.
For this reason, I would choose to emphasize career stability over job stability. After all, career stability can lend itself to job stability, but not necessarily the other way around.
Over the past few years, I've built a dependable professional network resulting in several job opportunities. I have continued to grow my knowledge base in order to be considered attractive to potential clients. I continue to refine my vision and work to constantly grow as a businessperson. These are the things that create career stability. I know if I leave the workforce for a few short months, I have a foundation from which to rebuild.
A network can help replace lost jobs post-maternity leave. Up to date industry knowledge will make time off relatively unnoticeable in the long run. A vision lends itself to creating a plan at all stages of starting and nurturing a family.
Career stability could look entirely different for you. Maybe you plan to leave the workforce entirely. Determine what you want to do post-baby and decide whether you've created a strong foundation to return to when the time is right.
What is my health insurance coverage?
How much does it actually cost to have a baby? Brace yourself.
According to a 2013 report by Truven, the average cost to deliver a baby was anywhere from $30,000 to $50,000, depending on the type of delivery. Without insurance, this cost is shouldered by the parent. With insurance, the parent pays an average of $3,400.
Averages tell us one thing — the numbers can vary wildly when looking at individual situations. So while one insurance plan might cover everything from the drugs to the hospital slippers, another plan could result in an additional charge for the littlest things you would never have considered.
Knowing the amount you will be covered for in your health insurance plan for before getting pregnant can help determine the amount you should have ready to go in savings.
Am I in the right home for a family?
After toying with the idea of becoming homeowners for some time, my fiancé and I recently dove headfirst into paying a mortgage and buying doorknobs. (Shudder.) But while the price was right and it was a good move for our current financial situation, there's one thing our new home won't be good for: a growing family. With just one bedroom and one office, a baby would make for some serious rearranging.
Plus, there are plenty of other non-family friendly factors that make our home questionable. It's probably not the safest area for little ones who want to play outside, and school quality is still an unknown. Slats in between our stairs could be a major safety hazard, and hardwood floors in the main living area might not be the best flooring choice.
Bottom line? A new baby could also mean selling our house — if not before baby arrives, then shortly after. This could be a major additional expense, one certainly to take into consideration.
What's your current home situation? Would it need to be adjusted or are you ready to bring in the crib and toys?
Do I have a plan for my finances?
The only thing worse than drowning in debt is drowning in debt when you have other people depending on you for financial support.
Creating and tackling a plan for your debt before starting a family gives you something invaluable: choice and peace of mind. If you want to take extra time off to spend with your new addition, less debt means fewer expenses to cover in your downtime. If complications result in higher out-of-pocket costs than expected, you don't have to compound the problems with financial stress.
Even if you aren't out of debt before starting a family, create a plan and timeline for reaching the other side.
In addition, make sure you're considering other big picture savings goals that can be harder to achieve with a growing family, such as retirement. Many parents will crowd out retirement saving for things like spending on college. But the truth is, college can financed. Retirement? Not so much.
In addition to growing my cash cushion, my plan is to max out my SEP IRA contributions in the years leading up to having my first baby. That way if a lower income means less money going to retirement in year one post-baby, I won't be behind in saving.
Am I mentally prepared for the financial challenges?
In the far back recesses of my mind, I know I can financially handle a baby. I can provide food and shelter and the vast majority of everything else they might need. Even if my financial situation were to change overnight, I trust I would know what steps to take, or know where to find the resources that would tell me which steps to take.
But let's face it. Having kids is one big black pit of unknowns. So there comes a point where you just have to put on your seatbelt, say a silent prayer, and accept that challenges — financial and otherwise — are an inevitable part of the journey. That mental preparation might be just as important as the financial preparation.
I might not know where the hurdles will be or what they look like, but I know I'll need to be prepared to shell out for broken bones, school field trips, and, occasionally, the most popular toy on the market.
And of course, I'll need to accept my adult status at some point. (Or not.)