Budgeting with children

For the vast majority of people, children are a considerable financial burden. Even if you feel quite financially stable before having children, you may not necessarily be after. Being in a couple or being single, it’s quite easy to stay solvent. You tend to have as many incomes as you do people, but once you have children, even one, things change quickly. Here’s some of our tips to budget with children effectively.

The costs of children

First of all, the most obvious factor for budgeting for children is having one more mouth to feed. The amount they need also grows with time as they grow themselves. Other considerations could be medical costs, which are more necessary at younger ages, and transport costs. On average, a household could spend around $13,000 a year rearing them, up until 18 years of age. This is before we even get into the question of education, both college, and pre-college. This final factor makes up the most considerable cost by far, although the price you pay definitely varies.

There are also less necessary things to consider, like buying them toys or expenses for birthday parties.

Another consideration is the change in income. Once you start a family, it is hard for both halves of a relationship to keep their careers. Generally speaking, either one of the pair has to have a less intensive career or no career, or they have to adopt a nanny. This may change as the child gets older and more self-sufficient, though.

How to mitigate budgeting problems with children

So, how can you make sure you are ready for children? Well, the first thing to do is be prepared before you even have a child. The overall sum you need to raise a child is, on average, just over $200,000 over the years. You have to calculate for yourself if you can consistently make enough to take care of them, and if you have enough reserve cash, should things go wrong. You should ideally have enough in an emergency fund for three to six months of expenses. Although the emergency fund can also cover things like accidents and unexpected medical costs as well. Ideally, if you have a good stable career at a respectable establishment, they should also offer maternity or paternity leave for you.

As is the sensible advice under most scenarios, put your money in a savings account. A worthwhile savings account will have enough interest to keep up with inflation. This would mean you could help yourself stay financially stable quite passively.

Taking care of your retirement is vital as well. While you are raising your child, contributing your funds to taking care of them seems essential. And rightfully so. However, you should take a pause to think about your own future. You do not want to end up being 50 and only then beginning to contribute to your retirement fund. Remember, the younger you start contributing, the more you will have at retirement age. This is not as selfish as it may seem. After all, if you take care of yourself, you will not be a financial burden on your child in your elder years.

If you qualify for childcare assistance, this can really help you if you are in a tight spot. States can help pay for pre-kindergaten, and can help with subsidies as well. Some states even offer these kinds of services at older ages.

Budgeting while having children young

However, if you are not prepared, it is not necessarily the end of the world. You may end up having children young when you do not feel prepared yet. However, having children while you are younger can also be a good help to you. You will have more energy to deal with them, as will your own parents. You should also consider the fact that part of the reason children are so expensive is because people make them expensive. The more money you have, the more willing you are to spend more, generally speaking. So this will be doubly true for something as important as a child. Finally, you should also consider that you can still have a career after your child leaves the nest. It will be easier to build financial solvency, as you will have more time and more energy at a younger age to focus on your career.

It is when you are older and not financially stable yet that having a child may be tricky in the long run.