How to Have the “Are We Financially Ready for a Baby” #RealMoneyTalk

 

Flashback to my parents asking me: “So when are we going to get a grandchild?” My response was, “When we can afford one.” The truth is, there’s no magic number for how much money you need to have before having kids, but you definitely need to have the “are we financially ready for a baby?” talk.

Right now you’re probably thinking, “do we need to talk about that?” and the answer is yes. We know how scary and heavy talking about money is, but it is an important first step in taking when you want to start thinking about the future of raising a family.

How to have the “are we financially ready for a baby” talk? Let’s dig into #RealMoneyTalk

Mommy and Daddy Need to Talk

The last time my husband and I had a #realmoneytalk was during our engagement when we were talking about wedding prep, joint savings, and moving in. It seems so long ago but it’s only been a couple of years. Fast forward to the present, my husband and I recently just celebrated our two-year wedding anniversary, but this time, we had a little addition to our little family. Both of us have been so lucky to have Baby Jordan without having the stress of his baby finances thanks to Turbo. The app helped us know where we stand and get financially ready to handle baby finances.

Having a baby isn’t the same as adopting a Golden Retriever. It’s definitely a lifelong commitment of raising a tiny human and making sure he has everything he needs as he grows older.

From being fiancés to husband and wife, and now mommy and daddy to the most adorable little boy, there was a lot of talks in between all of that, but here are the questions that came to mind:

Are Our Careers Ready to Have a Baby?

When my husband and I talked about having a baby, the first thing that came to my mind was my work baby. I thought, “What about my business?”, “What about TechSesh?” and a million questions came afterward. The one I was most concerned about was taking maternity leave.  As an entrepreneur, my business depends on me working to stay afloat. It wasn’t an easy decision to run my company and have a baby at the same time. I’m lucky I was able to give birth to my business before the baby arrived and I worked on content for while I was out of office.

Since I am the CEO of my own company, I was fortunate enough to make this the maternity leave decision myself and not have to run paperwork and have this talk with any bosses. The same question applied to my husband’s career. Michael also took some time off (he’s a real estate entrepreneur) and our jobs permit us to afford to miss some time away from work. Since he is also a founder of his own company, my husband was also able to make the decision to take paternity leave. The only difference is that he had to bring it up to his co-founder and team about it.

On top of that, we were able to bring a lot of our work into our home office and work remotely. That way, we are still able to control our business while taking care of our baby. FYI  I was working up until the day I gave birth and shortly thereafter (LOVE WHAT I DO).

If you work for a company, do your research and talk to your boss ahead of time about maternity leave- not all companies offer this. Translation? You may not have two incomes coming in for a few months.

According to the Family and Medical Leave Act (FMLA), both men and women are eligible for up to 12 weeks of unpaid time off due to childbirth. Both parents are also eligible to take this leave within one year of having a newborn child. There isn’t a federal law for a paid maternity leave as it is up to the states to figure it out. So far, there are only active policies in California, Rhode Island, and New Jersey.

Birth an Emergency Fund Before a Baby

So we had our baby shower, the nursery, the gadgets, the gear and the hospital and doctor that will deliver the baby. All good… right?

Baby finances go beyond giving birth. It’s not just a one time deal. It’s a lifelong commitment to care for your child. It’s important to initially think about how all these expenses will come into play and how much of your earnings will be set aside for the baby’s necessities.

While you don’t need tons of money sacked away to start trying for a kid, you should have an emergency fund ready to dip into once the baby arrives. At the most basic, make sure that you can contribute enough to your 401(k) to earn your employer’s match. Don’t pass up free money.

Monthly Costs

Pre-baby, I thought my biggest cost would be diapers, but that’s actually a small financial obligation. Health insurance is going to cost you as well as baby formula if you are not breastfeeding. 

List down the baby categories or where your budget will be allocated and talk about this one with your partner. Make sure you don’t fall for the marketing hype that babies need fancy toys and new cribs. Save that money, because you’ll need it when your child gets older.

Not only are you and your partner thinking about your own bills, but you’re also going to start thinking about the baby in your monthly budget and bills. Childcare will likely be your biggest financial kid-related costs until the child is school age so decide if you’re going to stay home or hire help. Save for his or her education. College is costly, but you can make it more manageable by starting to save early.

Unexpected Costs

While it’s good to start thinking about the monthly budget for your baby expenses, you should also think about keeping an extra penny for a rainy day or the unexpected costs. When I came home from the hospital I got a medical bill for $72,853.56 — I couldn’t believe my eyes. I called the insurance and hospital and brought it down tremendously and was responsible for $12,000. Still a lot, but good adjustment. Pro Tip: Ask for a discount!

Not only are you and your partner thinking about your home bills and of each other, but you’re also going to start thinking about the baby in your monthly budget and bills. You and your partner need to figure out where you are financially as a couple and where you will also be financially as future parents before you decide on having a baby.

Having kids is expensive. There’s no magic number for how much money you need to have before having a baby, but if you have a comprehensive plan and had the money talk, you’re on the right track.