Welcoming your firstborn entails making significant sacrifices in various aspects of your life. It might mean turning down jobs so that you can have more time with your child or missing out on a lot of travel and leisure opportunities so that you can have more funds for childcare. If you’re not financially ready to start a family, being an expecting parent could also mean getting into debt. This article should give you a head start of how to plan your finances for family life.
Get Your Priorities Straight
When starting a family, there are a lot of questions. Will your space be enough to accommodate the needs of your growing family? Is it time to consider scouting for house and land packages in West Melbourne? Do you have enough money in the bank to pay for childcare or education? Will your insurance cover the additional expenses?
Before you push through with your plan to welcome a new member to the family, make sure that your mind is focused on your responsibilities as a would-be parent. That could mean fewer hangouts with the gang, fewer travels abroad, or fewer trips to your favorite clothing store.
Set Family Goals and Milestones
Whether it’s getting out of debt before, saving for major expenses, upgrading a bigger house, buying a new car, or keeping your emergency funds high at all times, it’s highly advisable that couples set their short- and long-term financial goals. Create a checklist and then celebrate milestones to appreciate your progress.
Raising a Child Is Expensive
According to the Australian Institute of Family Studies, it costs $170 per week to raise a child. That’s approximately $9,000 per year. And that’s just for low-income families—the estimate could go up for families that earn more. If you’re planning to enroll your child in a private school, you need to prepare at least another $30,000 per year.
Money Talk Is Not Cheap
For Michael Anderson, a financial planner, the best way for couples to start preparing their finances for family life is to be open about money. He recommends doing a monthly family finance review, where you and your spouse or partner talk about the following:
- Previous Month’s Spending
- Upcoming Expenses
- Goals and Progress
Monthly money talks can help your household organize, prioritize, and optimize. This might be challenging for couples, especially when one party is not comfortable laying out his or her previous expenses, but remember that it’s not about you; it’s about your family. It’s best that you’re on the same page with your partner and commit to staying this way long after the child is born.
So, Are You Ready to Start a Family?
Deciding that you’re ready to start a family is one of the most significant—and riskiest—choices you could make as a couple. With an upcoming child in the picture, you need to reassess your priorities in every aspect, from your finances to your roles as a husband or wife. Take the time to reconsider your current financial situation and then ask yourself many times before you make your final decision.