Having kids is a joy. However, it can also be a huge financial responsibility. The cost of raising of child from birth to 18 can exceed $100,000. That is why financial planning is an essential part of family planning. There are several things that you can do to plan for having a child.
Create a Budget
The first step in financial planning is to develop a budget. Having a child can bring a lot of unexpected expenses, but if you have a budget, then it will be a lot easier to deal with all unexpected expenses. Your budget should include all of your fixed household expenses such as rent or mortgage and car payment. It should also include expenses that can vary from month to month such as food, transportation, childcare costs, home maintenance, recreation/leisure and medical costs.
Set up an Emergency Fund
You should definitely have an emergency fund before you have kids. You never know when you may lose your job or be hit with an unexpected expenses. It is a good idea to have a fund that covers three to nine months worth of expenses. It may seem difficult to save up that much money. However, if you get into the habit of putting away a little bit of money each month, then this will seem a lot more feasible.
Get the Right Insurance
You should make sure that your current health insurance plan will cover your child. You may also want to look into getting life insurance. If something happens to you, then life insurance will ensure that your children are taken care of financially. You may be able to get life insurance and health insurance through your job. However, if you cannot get this insurance through your job, then there are many insurance providers that you can choose from.
Trim Expenses Wherever you Can
Family planning is expensive, so you should try to trim expenses wherever you can. You can cut down on your monthly expenses by getting rid of unused memberships. For example, if it has been over a year since you used your gym membership, then it is time for you to get rid of it. Food is a major expense in many households. You can save money on food by cooking at home. You may also want to consider buying groceries in bulk so that you can take advantage of sales and discounts.
David Milberg is a financial analyst in New York.