How Can Couples Prepare Financially for Becoming Parents?

As the team at Harvest Wealth Partners, we understand that starting a family can bring immeasurable joy and fulfillment to your life. The laughter of children, shared experiences and the bond that grows over time are truly priceless. However, it is also a well-known fact that raising a child comes with substantial expenses. According to CBS News, it costs an average of $240,000 to raise a child to the age of 17, and this does not even include the cost of college tuition. Thankfully, planning ahead can help manage these financial challenges effectively. We are committed to helping you navigate this exciting journey.

Start Using a Monthly Budget

Establishing a monthly budget is the first step towards preparing financially for parenthood. This powerful tool helps track income and expenses, helping you spend within your means and save for the future. Prioritizing each dollar earned every month aids in tracking short- and long-term family goals. Whether using pen and paper or a digital budgeting tool, remember to include categories for savings and investments.

Build an Emergency Fund

Life is full of unexpected events, and having an emergency fund provides a financial reserve when needed most. Many professionals suggest saving three to six months’ worth of living expenses. This fund can cover unexpected medical bills, home repairs or even a sudden loss of income.

Boost Your Retirement Savings Percentage

Even if retirement seems far off, making retirement savings a priority is easier without children. With the magic of compound interest, you can seek growth for your finances over time. By boosting retirement savings before having kids, you’ll learn how to live on a lower amount of take-home pay.

Start a Parental Leave Fund

Since the U.S. does not mandate paid leave for new parents, figuring out how much paid time off you might receive from your employer is crucial. Creating a plan to save up the income needed to cover the rest of your leave can address financial well-being during this important time in your life.

Open a Health Savings Account (HSA)

A Health Savings Account (HSA) is a tax-advantaged way to save for healthcare expenses. This account is available to Americans who have a designated high-deductible health insurance plan.

Start Saving for College

The price of college only continues to rise. To get a handle on it early and plan for your future child’s college tuition, start saving for their education in a separate account.

Pay Off Unsecured Debt

If you have credit card debt, it is advisable to pay it off before having kids. Freeing up finances and saving thousands of dollars in interest every year can provide financial flexibility.

Buy Life Insurance

Life insurance is another crucial aspect to consider before having kids. A term life insurance policy that covers at least 10 years of your salary can bring you confidence.

Create a Will

A last will and testament lets you write down what should happen to your major assets upon your death. It also allows you to formally define who you’d like to take over custody of your kids if both parents pass away.

Talk to a Financial Advisor

While the cost of raising a child can be steep, planning ahead can help manage these financial challenges effectively. At Harvest Wealth Partners, we are here to support you every step of the way. Our team of experienced financial planning professionals is here to guide you as you plan for your financial future. If you’re ready to begin, reach out to us for guidance.