Financial Steps New Parents Need to Take

Almost every time I mention how expensive pets are, someone will comment something like, "You should write about how expensive kids are! They're way more costly." That's true, though it's not a fair comparison. It's like saying "homes are more expensive than cars." Duh. "Kids are more expensive than pets" is in the same league as the home-cars comparison. And before someone says it, pets are NOT a substitute for kids (or anything like them for that matter -- other than they are both living beings.) But I digress.

Anyway, I have written about how expensive kids are (BTW, check out this link to see if you can afford a baby). Now here's an article from MSN Money that talks about how expensive kids are and lists the financial steps parents need to take to prepare for them. They are:

• Start saving to build a cash cushion -- grow your emergency fund

• Create wills and define powers of attorney

• Review/update your insurance coverage

• Decide how to balance career/work with a child (and determine if one parent will stop working or work less)

• Don't try to "keep up with the Joneses" spending-wise

Overall, these seem to be good tips to me. There are a whole host of additional suggestions/thoughts from me in my kids and money category -- you may want to check out the posts there for more tips.

The bottomline is that kids ARE expensive (a HUGE expense) and you need to plan accordingly before you have them. What do I mean by "plan accordingly"? Basically, you need to do the same things you'd do before any major purchase (save up, re-look at finances, set priorities, etc.) These steps are even more important when you're talking about kids because you're dealing with human lives -- you can't simply walk away (like people are these days with bad mortgages) if things get tough financially.

Comments

[Mark B.]

Trent @ TSD had a great article about this topic yesterday, check it out:

http://www.thesimpledollar.com/2009/01/06/do-children-really-cause-financial-burdens/

It debunks some of the costs of children, very good article IMO.

[Mark B.]

The #1 issue to resolve before having kids is the day care vs. stay at home parent situation. I have 2 kids with 1 more on the way, and honestly, the costs other than day care are not really that great. Little extra food, some toys, some entertainment, etc.

The $1000 per month we pay for part-time day care is BY FAR the largest child related expense that we have. The only regret that my wife and I have regarding children is we wish we would have worked harder to find jobs with more flexibility, allowing each of us to stay home with the kids 1 or 2 days per week and limit their time in day care.

[JE Gonzalez]

Mark B., why don't you look for something flexible? Instead of leaving the search in the past keep on looking. 1 or 2 days? My parents were there 4-5 days a week! Just so that you know, it is at this time that you should really start considering multiple streams of income.

[Mark B.]

JE Gonzalez -

Trust me, I am trying to find something more flexible. Unfortunately, I live in the Detroit area and there are not many job options right now.

Right now my kids are with my mother-in-law 2 days per week and at day care 3. I am trying to work my current employer for a 4 day week so the kids will be spending 5 days out of 7 with a very close relative or parent.

My wife is a teacher, so she cannot reduce her schedule, but she does get the summer and other vacations to be home with the kids.

I feel that day care has been good for them, but 3 days is a little too much. 2 days would be a better balance for them.

[thomas]

Can I get a government bailout for kids (Besides the tax credit)?

[thomas]

Stay at home vs. day care is definitely a huge factor. Stay at home is the best personal choice for myself, however achieving that is very difficult.

[Anitra Smith]

After having my baby, I realized I couldn't leave her for 50+ hours/week with non-family. I tried to go back to my old job part-time, and couldn't. So I quit to be a stay-at-home mom. The problem is, we've cut our expenses quite a bit and still have a small shortfall each month.

I'm trying to do consulting now, and it's not going well. I'm not a good salesperson, and I get too distracted trying to do good work from home. I need to just go get a part-time job, I guess. It would be better for my daughter to have someone else watching her than for her to be around me when I have to make the decision to pay attention to her or to my work.