Finances to be ready for baby

Hummingbird125

Hey all! I'm a regular lurker, now that TTC is on my brain more and more...

I'm 27, FI is 30, and we will be married in May. We've talked many times about TTC right after we get married, and FI is 110% on board for that. However, as the more practical of the two of us, I need to be pretty certain that we can afford to have a child, otherwise I won't be going off birth control anytime soon. We both have stable jobs, good insurance, and we don't have any debt other than minor student loan debt. Right now all of our savings efforts are going towards the wedding, but we're planning on continuing to save at the same rate after we're married. 

I'd like to be a SAHM for a while - I'm pretty confident that I could work part-time/remotely from my current job (though of course I'd find out for sure before TTC), and FI is looking for a better-paying job. 

I guess what I'm wondering is - how do you know you're financially ready to have a child? How much are you planning on having saved up before you get pregnant? 

FemShep

Here are some things to think about before you get pregnant:

Health insurance-have at least your maximum out of pocket saved, and make sure you understand the premium increases for when you go from single coverage to family coverage.

Retirement savings-in a perfect world, you're maxing your 401(k) or IRA contributions.  At a minimum, you should both be contributing what is matched by your employer.  DO THIS IMMEDIATELY if you're not doing so already.

Life insurance-you don't need life insurance for your LO, but both you and your FI/DH should have a good policy that will cover you both through LO's 21st birthday at least

Emergency savings-have at least 6 months of living expenses in easily-accessible savings

Cost to SAH-Can you afford to put every penny of your paycheck into savings right now?  This is a great way to look at whether staying at home is a viable financial option *and* build up baby savings at the same time.  Keep in mind that there are other "hidden" costs to staying at home, particularly a lack of retirement account contributions as well as impact on your future earnings.

Cost to work-Even if you work remotely or part-time, you will likely need to arrange care for your LO.  Depending on where you live, full-time infant day care can cost over $2k/month.  If you decide you want to keep working, call a few local centers and save the amount of their infant tuition each month in your baby savings to understand the financial impact.

Baby costs-You really don't need much when you bring a baby home from the hospital, and it's absolutely possible to get everything you need for $500, especially if you're open to buying consignment.  You may want to buy some things new (you should always buy a car seat and breast pump new), so take a look at baby gear and save the amount you expect to spend.  As far as ongoing costs go, even if you exclusively breastfeed, use cloth diapers, and have a great medical plan, expect to spend some amount per month on baby expenses.  Better to expect to buy formula and disposable diapers and come in under budget than be unpleasantly surprised.

I know it might seem that some of these goals may seem extreme, and certainly not everyone has this sort of financial plan in place.  But I'd strongly recommend doing as much of this as possible.  Best of luck!

Hummingbird125

Thanks @Femshep - I've probably thought about all of those things at one point or anyother, but it's helpful to see it all laid out together. As it is right now I don't feel we can comfortably afford to have a child, but I/we are also not willing to wait more than a year or two to start TTC, so it's helpful to look at exactly what we need to work towards in order to get there as soon as possible.

lifeonthehill

@FemShep said it all wonderfully. That is pretty much our list except we also have to consider saving some money ahead of time for a down payment on a nicer car. We don't expect ours to actually make it to the time we would have a baby and we are trying to avoid hefty monthly payments.

I am in the same boat as you with the "comfortable" problem. I know we can afford it but it will take a lot of the comfort out of our lifestyle. For us it is just worth giving up because having a family and me staying home is important to both of us.

Good luck!