Don’t Have Kids Until You’ve Hit These Money Milestones

Father holding baby as it sleeps on his shoulder

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Raising children comes with a hefty price tag. The U.S. Department of Agriculture estimates the average cost of raising one child, from birth to age 17, and who was born in 2015, to be $233,610. When inflation is taken into consideration, that figure inches closer to $284,570.

We often hear that purchasing a home is the biggest expense you’ll take on, but raising a couple of children will exceed that expense for most people. Add in college or the cost of raising two or more children, and you could buy your home twice in most areas.

But like preparing to purchase a home, you might want to get your financial ducks in a row before choosing to bring your precious little one(s) into this world. In a best-case scenario, there are five money milestones you should strive to hit before having kids.

Have a Stable Career

Establishing a secure work situation before having children is crucial. While that can mean traditional employment, self-employment, or some combination thereof, you want to have a stable foundation that will support your growing family.

Try to pursue career paths that you can continue after your children are born. Also strive for earning a salary that will cover the expense of childcare—which amounts to about 16% of the total cost of raising a child, on average.

However, there is more to take into account than just salary. Consider a career that will afford you benefits like maternity or paternity leave and healthcare. Also, look for a decent personal/sick leave policy so that taking a day off to care for an ill child does not mean you’re out of a day’s pay.

Have Enough Disposable Income

While $233,610 sounds like a lot, and it is. That amount breaks down to $12,980 annually or $1,082 monthly for one child. Use Huntington National Bank's Cost of Raising a Child Calculator to get a better idea of your estimated annual costs to make sure you have enough room in your budget before the expenses come rolling in.

Running these numbers will give you an idea of how much of your disposable income will need to be allocated to raising children. You can even get ahead of the game by saving up a year or more—or as much as possible—of those estimated costs.

Have an Emergency Fund in Place

Because parenting is an adventure that can bring you to the zoo one day and the ER next, being financially prepared for the unexpected when you have children is necessary. From covering the copay for a broken leg to the insurance deductible for your teen’s first fender-bender, having an emergency fund of around three to six months of expenses will protect you and your family from being overwhelmed by life's inevitable messes.

Begin to Contribute to Your Retirement

As your children grow, the cost of raising them will grow as well, so start to save for retirement before you have them. Since the responsibility of saving for your retirement will fall solely on your shoulders, contributing to a retirement fund before you have kids will not only secure your future but will also relieve the potential burden of your children being financially responsible for you as you age.

Be in a Position to Save for College

Many people are unrealistic about what it takes to handle the (rising) costs of college. The student loan debt crisis worsens every year, and there is no indication that it’s going to turn around anytime soon.

There are ways to lessen the financial burden you and your future children will face when they reach college age, and the best is preparation. If you make sure you’re in a position to save for your kids’ college education from birth, you'll set them up to be ahead of the class—at least financially speaking.

Have Insurance (or the Ability to Pay for It) in Place

Being able to afford medical and dental insurance for yourself and presumably for future children is extremely important. If you plan to become pregnant, make sure your health insurance covers routine prenatal care (it should), and make sure to add your child to your insurance policy or enroll them within 60 days of a birth or adoption.

If you plan to have children, you and your spouse may want to consider purchasing life and disability insurance policies to protect your family's financial future if one or both of you were to die or become disabled.

What Happens If You Don't Hit the Milestones

Ideally, you’ll be able to hit these milestones before having children. But also realize they represent a best-case scenario. Not being able to check these all off the list doesn’t mean you shouldn't have kids or that you’re destined for financial ruin if you do. Rather, let them serve as goals to be aware of and reach for. The more of these milestones you’re able to achieve before having children, the fewer financial worries you’re likely to have while raising them.