Starting a family is not a financial decision. You do it because you love your spouse, you love the idea of having kids, you have always wanted to be a parent or for some other variation on this theme. Maybe it’s always been a life goal of yours to have kids. You’re at that stage in your life and you want children; you didn’t just ask yourself if it was financially feasible.
That’s fine, but you do have to understand that your finances change as you start a family. They have to. Things to consider include:
- Medical costs when having a child
- The cost of items you’ll need at the house, like a crib or baby clothes
- Health insurance and health care costs
- The cost of childcare once your parental leave at work ends
- The money you’ll want to put aside for your child to go to college; yes, it feels so far off when you literally just had a child, but it comes sooner than you think
- Any changes to your taxes
- Any changes to your income
- Increases to certain parts of your budget, such as grocery bills
- Changes in the amount of flexible, disposable income you have
- Necessary housing changes now that it’s not just two of you
These are just a handful of examples. The key is to remember that this is a big transitional period in your life, and that period comes with monetary changes.
Estate planning issues
As you consider all of this, you may want to think about how it impacts your estate planning. For example, maybe you now want to take out a life insurance policy so that you can provide for your family even in the event of an unexpected death.
Or, maybe you don’t just want to save money to help your child go to college. You want to set up a trust specifically for those college costs. This ensures that your child will use it for college and it allows you to lay out rules for how the money gets distributed if you’re not around to do it yourself.
By no means are these all of the estate planning issues to consider. It may be as simple as finally getting around to writing a will because it’s more obvious than ever that other people depend on you. Many people really start to take estate planning seriously when they have kids.
If that’s where you’re at in life, make sure you know what steps to take and how you can put your family first.