Financially Planning for a Baby [Part 1]

Do you need to wait until you're pregnant to start financially planning for a baby? Heck no. I would say the earlier the better. We started two-and-a-half years ago. Although we weren't directly planning to have a baby, going through Financial Peace University was the first step in preparing to expand our family. Obviously God has perfect timing and could have blessed us with a child at any point, but in our worldly perspective, Kels and I always said we would wait five years after being married to have kids. Remember what we celebrated two weeks ago? Sometimes God's timing lines up with ours!

A few weeks into FPU, it was pretty evident that we had a clear direction of where we wanted to be before we started to expand our family. We for sure wanted to be debt-free except for our house (at that time we had lived in our house less than a year and weren't considering selling it). You can read our debt-free story if you haven't already, but here is a brief recap of the things we have done to prepare financially for the arrival of B-dub.

How We're Preparing Financially for a Baby

  1. Getting rid of our consumer debt. A la the Dave Ramsey's debt snowball, we worked very hard to get rid our student loans and vehicle debt. Our second jobs were key to accelerating this step and moving us toward financial freedom. I said multiple times that I would rather work a second job then than when we had kids.
  2. We are planning to sell our house. We have a really nice house, but it's expensive. If we are able to rent something for half to three-fourths the price of our mortgage and taxes, we will be saving $600-$700 a month. Sure, we'd rather bring our baby home from the hospital to a house than an apartment, but more importantly we want to bring our baby into a financially secure and smart household.
  3. Cut costs and save money. You know what else is expensive? Child care. See the above number that we will save each month if we sell our house and you now know where that money will be going. Our plan while renting is to also save up a stash of cash for a BIG down payment on our next home purchase, which for many reasons will be smarter than our first.
  4. Emergency fund. There are a lot of unknowns in life, and an emergency fund is a great way to make dealing with said unknowns easier. We are saving up four months of expenses for unexpected life events (Dave suggests 3-6 months, and we plan to get up to six eventually). We have been working on this since becoming debt-free in January 2011 and are more than halfway to our goal. This step should be completed as soon as we sell our house or in February 2012 if our house doesn't sell.

Can you see why we want to sell our house before the baby comes in March? We are trying not to worry or stress about it, but rather pray and wait. We are so grateful for the position we are currently in. Again, God's timing is perfect. If you have kids, chances are things didn't work out as perfectly as planned, and we understand that. That's part of living a better story. Looking back, it would have been better if we had sold our house a couple years ago, or if we hadn't bought a house before we were ready. We'd be in an even better spot right now. But no matter where you are financially and no matter what your family looks like, now is always a great time to get your finances in order.

Remember, you can't change the past, but you can take control of your future and start getting into financial shape today!

Any other tips for financially planning for a baby?


Other posts in this series: Part 1 Part 2 Part 3