Often, people say buying your first home is the biggest expense you will have to take on. This has nothing on the price tag raising a child carries. However, this does not mean you should not have one if you want to. The secret is in coming into parenthood prepared, not just with yourself but also with your finances. Following are a few money milestones you should strive to achieve before becoming a parent.
- Establishing your career.
Bringing a child into this world is infinitely easier when you have a secure work situation. It can take different forms: traditional employment, self-employment, or some combination thereof. The point is to have a stable foundation to support the new addition into your family.
A career that you can continue after your children are born or adopted is ideal. Also, make sure you are earning enough income to cover your child expenses. Benefits like parental leave, health insurance, personal and sick leave policies are important, too.
- Having enough disposable income
Statistics show that you need over $1,000 a month in disposable income to raise one child from birth to age 17. That is a lot of money. But it is a good guide in figuring out how to set up your budget so you have enough disposable income to allocate towards raising your children. You can even get ahead of the game by saving up a year or more of the estimated costs.
- Build your emergency fund
Emergency expenses are a part of parenting. There will be unexpected adventures to the ER or fun trips that are suddenly a must. Being financially prepared for anything is necessary as a parent. From covering the copay for a broken arm to the insurance deductible for your teen’s first fender-bender, having an emergency fund will save you from a lot of messes that will eventually come up with your children. It is just a part of the deal. Aim to save up to six month’s worth of income and place it in your emergency fund. It goes a long way in security and peace of mind.