6 Signs You're Financially Ready for a Baby

It doesn’t take large studies to know that millennials are delaying major life events such as buying a home and having children due to finances, but these studies exist anyway and there seems to be a new one every month. Millennials are delaying family planning due to uncertainty in the economy, a lack of savings, lower than desired income, and high childcare costs. The trend is unlikely to break with the younger group of Gen Zs as they enter adulthood.

There’s no magic way to know exactly when the right time is to start a family, and if you tried you could find endless reasons why now isn’t that time. But if starting a family is important to you, you want to be in the best financial position you can. Here are six key factors to consider to help you feel more comfortable about making the leap to parenthood:

1. Income. There’s no magic number that means you’re ready for a baby, but you should take a look at your budget to see if your income can handle added baby costs like food, diapers, medical care, and clothing. Is your career stable? If you don’t feel comfortable with your company, role, salary, or benefits, now is the time to make a change before a new family member arrives.
2. Savings. With monthly expenses going up on things like childcare, diapers, food, and healthcare, your ability to put money into savings will likely take a hit. Are you still able to put a chunk of money away each month to grow your emergency fund, down payment savings, or nest egg? Can you swing extra savings for your children's future college educations?
3. Retirement. It might seem like retirement savings falls into the category of "savings," but retirement savings serve a different purpose. This is money you'll need to live on when you're no longer earning a salary. Are you setting aside money each month in a retirement fund, such as an IRA or Roth IRA? Because of compounding interest, the younger you start saving for retirement, even with small deposits, the more time your money has to grow.
4. Revolving Debt. It can be easy to overlook credit card debt, because minimum payments can be fairly low each month. The cost you really need to look at, though, is the amount of interest you’re paying. How much money are you losing each month to interest? How much does that add up to every year? Paying down debt and paying it off entirely can help you save hundreds per year. This is money that's freed up to help you start your family.
5. Other debt. Student loans are an absolutely crushing weight on millions of young people looking to start families. Are your student loans under control? If the interest rates are fairly high, it may be worth speaking to someone about refinancing and consolidating them. Bringing those monthly costs down will help offset some of the new baby expenses you’ll be adding.
6. Discretionary income. Along with these other changes to your monthly budget come changes to your discretionary spending. You're probably comfortable with the thought that more money will be going toward purchases for the baby like diapers, food, and clothing, but have you come to terms with the fact that this also means you'll have less to spend on hobbies, dining out, wardrobe updates, and entertainment? Not only that, but you'll have to set aside funds for a caregiver for when you do set aside time for a date night. This can carry an emotional weight with it too, so make sure you've given yourself space to get used to this new normal.

If you’re comfortable with where your household stands on these six factors, then congratulations, you might be financially ready to grow your family!

Ultimately, you have to weigh the factors that are most important to you. Perhaps you’re comfortable saving a little less each month in order to have a child sooner. If you want to try to have multiple children then it may be more important to you to start your family while you’re younger. Maybe you’ve experienced some financial hardships and are worried about the uncertainties of making such a big life change. You may also have additional expenses related to starting a family, such as adoption fees or infertility treatments.

Talking to one of our financial professionals^† can help you make sure you’ve got a budget that works for you and that other important changes you need to make, like updating your will and choosing life insurance, aren't forgotten in the excitement of expanding your family.

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^†Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Hanscom Federal Credit Union is not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Hanscom Investment Services, and may also be employees of Hanscom Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Hanscom Federal Credit Union. Securities and insurance offered through LPL or its affiliates are: 

Not Insured by NCUA or Any Other Government Agency / Not Hanscom Federal Credit Union Guaranteed / Not Hanscom Federal Credit Union Deposits or Obligations / May Lose Value