How to Financially Plan for Having Children

Posted on Friday 20 April 2018

This article is part of our Finance Hub.

There are numerous ways to live a satisfying life on a modest budget. However, once children enter the scene, it becomes a different ballgame entirely. Having a child is a significant milestone in the life of an adult. Usually, the announcement of a baby is a happy thing. However, without proper financial planning, excitement can quickly become a form of distress. This is why financial preparation for the newest family member is imperative.

Understand that Children are Incredibly Expensive

Virtually everyone has heard the saying: "Kids are expensive." However, hearing that children are pricey and getting a numerical breakdown of the associated and ongoing childcare costs are two different things. The exact digits can help people understand the gravity of the costs. If you are preparing to have kids, you need to know the specific average costs.

Thankfully, Discover thoroughly breaks down each facet of childcare. For instance, the average annual expenses of raising a child within the first two years cost over $12,600. This breaks down to the following average, yearly costs: $2,900 for education/childcare, $1,800 for transportation, $800 for clothes, $3,700 for lodging, $1,600 for food, $1,200 for healthcare, and $900 for various other expenses.Admittedly, these costs can be higher or lower depending on assorted factors. Nevertheless, this data provides an idea of how pricey it is to care for a child just within the first 24 months. Thus, you must know how to financially plan for having children.

Here are a few tips that can help you financially prepare for kids:

Have a Plentiful Emergency Fund Stashed Aside

An emergency fund is paramount for all adults. However, it becomes doubly critical when preparing to have a baby. The truth is no matter how much money is carefully budgeted out; unforeseen costs have a way of arising, especially when babies are involved. According to USA Today, new parents are advised to save up to [at least] six months of living expenses in the event of any crises or urgent matters. Even after the baby arrives, this emergency fund should not be touched unless it becomes absolutely necessary to do so.

Ensure To Have Steady, Reliable Income

While budgeting and saving money are incredibly important financial steps for having children, the positive impacts are severely counteracted without the existence of a steady and reliable income. This is why Money Crashers recommends expecting parents to have ongoing pay and preferably an established position. This is recommended if you work in a company.

You need to correspondingly limit your spending. You and your partner can practice everyday ways to save when you buy online and in real-time. This will effectively limit your expenses. It is also important for you to become more conscious of your credit score. Thus, you need to learn to avoid costly credit card mistakes.

Each family has varying work situations. Hence, what applies to some parents may not be suitable for others. While each circumstance and career path is different, steady and reliable income is paramount when starting or expanding a family.


Children are a blessing to any loving couple looking to grow as a family. The ability to enact strategic financial plans is guaranteed to make raising kids much easier and stress-free. Understanding the expenses associated with children, maintaining a healthy emergency fund, and ensuring reliable income streams will make a significant impact. The ups and downs of parenthood are unavoidable, even with the best of plans. However, following the preceding steps will prevent many problems both in the short-term and long term.