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.
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.
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.
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.
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.
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.
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?