You might be surprised by my response to this question. But in general, I don’t think you should plan having children around your finances or financial situation. In other words, I do not think finances have to be in order to have children.
Now I know there are some exceptions in which a child couldn’t receive the medical care or food needed for survival if there wasn’t some sort of firm financial foundation or income. But then again, by whose standards of living am I basing that statement? There are people with children in other parts of this world without the standards we’re accustomed to having. Although there are struggles, many children survive fine.
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Why your finances don’t have to be in order
Okay, so back to my initial thought. Why do I feel this way? Simple…
Having children is a blessed part of life. If you’re considering starting a family let me tell you there is never a perfect time to do so. Truthfully, the only perfect timing is God’s timing. If you use finances as an excuse you’ll certainly find something holding you back. A financial excuse could also block God’s plans for you as it relates to children.
Let’s just consider for a moment you have no debt and your emergency savings is fully funded. You could still conclude you don’t have your retirement fund established , or perhaps your home paid off.
No, there is not a financially ideal time until perhaps you’ve reached the point of financial freedom and all financial goals are achieved. But even at that point, I suppose you could reason you don’t have enough time and resources for children because you’re focused on giving to others.
How far do you take achieving financial goals before making the decision to have a child? I don’t think there is a good answer and therefore, I don’t believe you can ever apply what I refer to as a financial child birth formula.
Do finances fit anywhere into the picture of having children?
While I don’t think finances should deter or stop you from having children, I do think there are some wise financial things to do in order to prepare.
Lifestyle adjustments
The best approach to prepare for having children, in my opinion is to focus on adjusting lifestyle. Ultimately, I believe people should have children and adjust their lifestyle accordingly. By adjusting lifestyle you can still make progress towards financial goals and enjoy the blessing of having a child.
Perhaps you’re diagnosed with a condition that required additional expenses to treat each month. You might be forced into a lifestyle change in order to continue to make forward progress with paying off debt, etc. The same approach holds true with having a child.
Emergency savings
You can either build an emergency savings, or create a separate cash savings for children. Having cash on-hand is helpful. There are many expenses that come up that are sometimes unplanned with young children. Having an extra savings fund available to draw upon from is helpful in those cases.
But guess how much emergency savings I had when we had our first child? Zero, yes, zero. It would have been helpful, but it’s not necessary. Again, a lifestyle adjustment would ideally allow you to build an emergency savings while raising children.
Insurance
Buy the most insurance you can afford. As the father of two young children, I can tell you that you will want the best coverage that fits within your budget. You might be able to save on insurance premiums later, but good coverage early can help cover pregnancy, delivery, hospital and other medical costs.
One household income
Live off one household income. I feel very blessed my wife and I made the decision when we did to sacrifice and learn to live off of my income. It took some adjusting (again lifestyle adjustments), but we made it work. As an aside, I love the fact that my children are able to spend each day with my wife. This is an opportunity for my wife to instill into them our Christian values.
Reduce or eliminate debt
Of course, it’s helpful to reduce or eliminate debt. Looking back, we paid off debt to make living off one household income possible. But if you’re unable to pay off debt prior to having your child, you can look to cut out big expenses which might include driving used versus new.
Pray
Finally, set everything aside and just turn to God. It may be within God’s plan for you to have a child now. And even if your finances are not in order you have to be open and responsive to God’s plan for your life. You have to trust He will provide.
Final thoughts
Don’t sacrifice having a child, which is one of the rich’s blessings in life, over accomplishing financial goals and having a perfect financial situation. Remember the path to financial freedom is a life-time journey. Life will bring many new things along the journey. Certainly, we have to take wise steps to prepare, but most importantly we have to learn to adjust and modify our plans around these blessed events. And of course, you can still achieve financial freedom with children.
What are your thoughts on having your finances in order before having children?
While I certainly think it’s a wise decision to have your finances in order before having children, I don’t think it’s something where you should NEVER have children if you’re not 100% debt free and working off a budget. I do think having a child should be a wake-up call for many that don’t have their finances in order – to tell them that it’s time they should think about getting them straight.
My wife and I are blessed to have been able to get out of debt, have a 9 month emergency fund saved and able to be saving for retirement. We’ve also been living off of one income for some time, so if my wife decides to stay home (most likely), we’ll be ready for the reduced income. Now that we’re expecting our first child (2 months away!) we’re so happy that we were able to get financially ready before the little guy came into this world!
Pete, I think you summed up my thoughts well. I think I buried this statement in the post – “While I don’t think finances should deter or stop you from having children, I do think there are some wise financial things to do in order to prepare.” I like your thought on it being a “wake-up call.”
Anyway, there just isn’t a perfect financial situation to reach before you have children and I hate to see that deter people.
Your situations is ideal. You’ve obviously made some very wise choices in the management of your money.
Jason,
This is an interesting post. I agree with you that finances don’t have to be pristine before starting or growing your family.
With that said and since this is a Christian based PF blog, there are a lot of low income families starting and/or growing families with little or no money. I know you elude to this in your second paragraph.
The end result to the money woes is trusting that “God” will provide for them, depending on assistance from others or the government.
On the other side of the coin, a family could always come up with an excuse to why they’re not financially ready to proceed with a family.
Very good post and discussion.
Having grown up in a household that didn’t have a lot of money (my father worked at a food shelf ministry. Ministry doesn’t pay well as a rule), I’ve seen how a family can have a loving successful environment, even when living on a lower income. I’ve also seen how many low income people who would come into the food shelf had bad financial situations and little hope for improvement – often because of family histories of drug use, abuse and a variety of other detriments. Money is only one of a good number of problems facing these many low income families that I saw. The ministry my father worked with was able to help them in getting them adequate food to eat, and helping to clothe them, and even some were helped through classes held at the food shelf – but quite often they weren’t in a position where they wanted to improve their situation – or going off of public assistance and getting a job would have meant less income coming into the house. It really is a tough situation to look at, and not one I have any good solutions for.
In any event, I know many or most of these low income families didn’t plan for having children before it happened, and in many cases continue not to have a financial plan even after having children. As a Christian I think a lot of these heart issues could be improved through faith in Jesus Christ – and living in his example – and even if money issues aren’t solved, at least family life could be improved.
i take the complete opposite stance. i think that finances should be in order before having a baby. this is because of something that i read in the proverbs that goes something like “till your lands and then build your house”(i don’t remember which one it is exactly
(Editor’s note: I believe the verse is Proverbs 24:27 – “Do your planning and prepare your fields before building your house”).
From my understanding the holy scriptures tell us to first take care of the important things in like like finances and the like before settling down. while i don’t mean that you should be rich, i think that ones finances should not be a cause for sleepless nights.
As a Certified Financial Planner focused on new and expectant parents, you’ve hit right on my area of expertise!
I meet many new clients who call me (sometimes a bit panicked) weeks before their baby is due. However, having a baby (especially your first) is such a life changing event that it’s hard to really comprehend and internalize what the lifestyle and financial impact is going to be before you actually become parents. I find that those couples that come to me with a 3 – 6 month old baby are best positioned to understand how parenthood is starting to effect their finances and what decisions and areas they want to address.
The one area I strongly advocate that all expecting parents address is to put a will in place. While no one wants to contemplate the worst, things do happen and you don’t want the courts to decide what is best for your baby. It only takes a couple meetings with a lawyer to get this vital task done, and you’ll have peace of mind that your wishes will be properly carried out.
I think the key is “lifestyle adjustments”. In the end, having a child is a big commitment. Can you you adjust your lifestyle to provide the proper care for your child, whether that entails emotional care, financial support (food, shelter, etc.) or time. In the end, there are some things you have to be willing to give up in order to have a child, and you have to be willing to be a little less selfish. I think those lifestyle adjustments, and a willingness to make them, are more important than a mere accounting of whether you have enough money, by the world’s standards, to have children.
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I think this is a great post, for many reasons (more than I can comment on, and will have to distill in a future post of my own). I am erring in favor of not having your financial house in order before children is alright. But, (and that’s a BIG but) some serious lifestyle changes must be put into place when that baby arrives.
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The problem with getting our finances together before having children is that in a way it makes finances more important than children. It’s good to have some semblance of control over finances before having kids, but if that becomes the primary criteria, few people would ever have kids.
Considering the cost of raising kids, how much money would EVER be enough??? Any time one money need is satisfied, another inevitably takes it’s place.
Health is another factor. Just because you can have children now, doesn’t mean you’ll be able to have them in five or ten years when your finances are straight. Delay could translate into never.
Money should never be the utimate measure of all things. Heck if it were, none of us would ever do anything! Sometimes we just need to go forward and have faith.
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While I would never think that finances is a basis for deciding on kids, it almost goes without saying that you should have your finances in order before having kids. And after. And during (although, best not to think of finances wile “having” kids – it will spoil the moment).
In fact, having kids is a good reason to get one’s finances in order, as if anyone needed that as a reason.
But, when push comes to shove, having kids pretty much knocks all of our finances out of order anyway.
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I would give this a resounding “no”.
You could easily find yourself waiting for the rest of your life to have kids.
Parenthood is far too wonderful an experience to miss out on simply because you are not completely debt free.
Having children of course means a whole host of new financial obligations but it can all be done if you really want to and it is more than worth it.
Having ones finances in order prior to having children would of course be ideal, but on the other hand probably unlikely for many. Plus, it’s always healthier for both the Mother and child to go through pregnancy at an earlier age.
I think the toughest lesson most households have is failing to learn to have their priorities in order, which affect them financially. For example, instead of buying a new car, purchase one that’s already lost much of it’s depreciation, and who needs a new cell phone with the fanciest gadgets every year? Realistically, no one needs that. Simple choices financially, make big differences later, with or without children.
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