Since most of my friends are in their late 20’s and early 30’s, babies are a hot topic. It seems like many families are comfortable with deciding when they want children, but what most people struggle with is deciding just how much money they should save in order to comfortably have them. Is there really a good number that everyone should have before they start a family? Here are my thoughts below.
1. No, There’s Not A Good Number
People always say, “There’s never a good time to have a baby” since our lives are so busy and hectic. Similarly, I don’t think that there is a universal number of how much people should save before they have kids, since everyone’s situation is different. Instead, think about your monthly budget, how much you normally spend on expenses, and do research to calculate the cost of what having a baby will add to that number. Consider the cost of diapers, formula, clothes, and other odds and ends like bottles that come with having a baby. Think about housing too. Will you have to upgrade to a bigger place or do you already have a spare room? Once you think about everything that will change when you add to your family, you can really start to crunch some numbers.
2. Pad Your Emergency Fund
While there’s no universal number on the amount you should save before having children, what is important is that you have an emergency fund you can rely on if you need it. Experts vary in their opinions of how much people should save in an emergency fund, from $1,000 to 6 months of your monthly income. This will be different for every family, but having 3-6 months of expenses saved up would definitely offer great peace of mind when having children. This will protect your family in the instance of a layoff or another unexpected change.
3. Health Expenses
One important aspect of parenthood to consider is the health cost. You should consult your insurance plan to find out how much you will have to pay out of pocket for doctor’s visits and hospital stays. Start researching the expense for adding your child to your insurance plan and how much co-pays will be each time you go to the pediatrician. Armed with this knowledge, you will be able to successfully figure out how much you need to save for a few months of health coverage for your child.
So, while there isn’t a magic number that parents should reach before deciding to add to their family, being informed about your health plans, your budget, and future costs is important when making your decision. If you haven’t been on a budget, now is a great time to start. Track your spending and see where you can cut costs to make room for your baby’s expenses. While it will take some planning and foresight, the reward that comes with being a first time parent is certainly worth it.
How much did you save before you decided to have kids? How did you come up with that number?
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