Can You Afford to Have Kids? Things to Consider Before Starting a Family

Posted: 21 Jul 2011 04:00 AM PDT

Children are expensive, without question. Many financial planners claim that a home is the largest investment that most people will ever end up making, but they are forgetting the investment that goes along with having children. Raising kids far exceeds the amount of money spent on a home. There are all kinds of things to consider when it comes to planning for a child, and if money were the only consideration a lot more people would be childless.

photo credit: Sarah Wampler

The Basics

In the beginning you need to consider the basics; things like reduced income from time off during pregnancy and birth, the cost of diapers, baby food, stroller, and baby clothes (the list goes on). You need to get clear on what your employee benefits are through your employer. Do you have short-term disability coverage? If you do it will typically cover 60 to 70 percent of your income for a six week period. Even if you don't have coverage you may still be able to take time off due to the Family Medical Leave Act (FMLA).

Insurance and Finances

If you and your spouse have separate insurance plans, consider combining them to see if you can save money if you are all covered under one plan. This way you are making one payment each month instead of two. If it is cheaper to keep the plans separate, then there is no need to combine them. You will also want to start considering updating your insurance plans to cover the new family member. This includes car insurance plans. Your monthly rate may increase for car insurance, but often if you use one company for multiple services- meaning that you get all your insurance needs (health, car and otherwise) from one company, you can often receive a discount.

Baby Fund

If you are still only in the beginning stages of planning for a child and are not yet pregnant (or even if you are) start a baby fund where you put aside a set amount of money with each pay period. This is for unexpected expenses, and there will definitely be some when you have a child. Start exploring child care options way ahead of time so that you can find what is most affordable and comfortable for you when the baby finally arrives.

If you are ready to start buying equipment, be sure to save whenever you can. For car seats and strollers it is important to have high quality equipment for the greatest safety, but things like cribs and high chairs don't need to be brand new. See if you can find some hand-me-downs from friends or family. If nothing is available there, look at used furniture stores and shop there. Your baby won't know the difference and they will grow so quickly that most of the equipment you have will be used for a matter of months before it is too small.

Perhaps the most important things to keep in mind are the basics: budget, save, invest. That being said, map out expected expenses and leave some room for the unexpected; make a baby budget. Ideally you will do this far enough in advance to find a way to cover all your bases before the first child is born. Map it out so that you aren't derailed and pushed into debt when your family starts to grow. Having a family can be one of the most fulfilling things you will ever experience, so take the steps in financial preparation so that you can enjoy the years of parenting that lie ahead.

About the author: Jenni Sunde is a freelance fashion writer and pop culture junkie. Jenni specializes in all things lifestyle-related. From home and design to health and beauty. With her love of art and all things beautiful, she delights in sharing her sense of style from her life to your computer monitor. Her title pegs her as an editor at a website that specializes in providing people with a quick car insurance quote, but her passion leads her into writing with a little more substance and a lot more heart.

Dollar Matters: Investing Goodness

Posted: 20 Jul 2011 09:00 AM PDT

One of the ways to build wealth is to invest. When you invest, your money works for you — and usually does so harder than if you use a savings account. As you consider ways to invest, and encourage your money to do more, here are some great blog posts to get you going:

One Key Advantage of a Roth IRA

Free Money Finance takes a look at this tax-advantaged retirement investment account. If you are serious about retiring well, you might consider that a Roth IRA can be a helpful tool.

Time To Revisit Your Employer Sponsored Pension Plan

Boomer & Echo makes a good point about the need to make sure your employer sponsored pension plan is really working for you. Make sure you are getting the best value.

Why Your 401K is Likely the Best Place to Invest

Outlaw Finance takes a look at the boring old 401K. While not all of these retirement plans are ideal, there is a chance that you 401K is a good place to go to start building a retirement nest egg.

Investing in the Green Movement

If you are interested in investing in things meant to make our lives “greener,” Good Financial Cents has some great ideas. Learn what to look for in a green company.

Risk Means Different Things to Different People

Over at Oblivious Investor, you can learn a little bit more about risk. It’s important to remember that risk isn’t the same for everyone, and your definition of risk might be different from someone else’s.

Finances in 55 Seconds: Create an Alternative Income Plan

At Bargaineering, I share how you can kick start an income plan in less than a minute. Of course, whether you are starting a business or building an income portfolio, the actual results will take much longer…

How to live off investment income

Monevator has some great insights into how you can live off investment income. Make a plan, build up your portfolio, and then plan your income so that it makes sense.

How Activist Investors Make Money

Investing Blog offers an insightful look at how activist investors manage to make money. It’s an interesting journey into how you can become an activist investor — and use it to your advantage.

Life Insurance Blog