No, I’m not preggers. 🙂 Also this whole blog post is working on the assumption that the pregnancies in question are planned and intended.
I’ve frequently heard these this phrase when it come to making the decision to have a baby, and I completely agree. I don’t think anyone is ever really ready for the physical and emotional drain that a newborn brings.
But, financially speaking, can you be ready to have a baby? I think so. In fact, I think getting pregnant is the same as any other huge life decision. Like getting married, or buying a house, or moving across the country. If you aren’t financially prepared, you probably shouldn’t do it.
Now, I’m years and years away from entering motherhood, but I have the benefit of having 13 nieces and nephews (‘betcha didn’t know that about me!) so I know a teensy bit about what having children entails, and I think there are a few things I would want in place before deciding that I’m financially ready to have a child.
I’d want to be pretty secure in my job before getting pregnant and having a baby. I’m the primary breadwinner in the family, and I don’t plan on leaving my full time job permenantly when children enter my life. So, I would wait until I’m secure in my profession before considering myself ready for children.
An Emergency Fund
I’d definitely want to have a good solid emergency fund in place before having a baby, because you never know what’s going to happen. Maybe I’ll need to take extra time off work, or maybe I’ll be put on bed rest due to complications. There are lots of unfortunate and costly things that can go wrong with a pregnancy, and having a nice thick cushion of cash to draw from is non-negotiable.
Parental Leave Top Up Cash
In Canada, the government will pay for parental leave for up to 35 weeks. It’s basically employment insurance, which means you need to work at least 600 insurable hours in the last year to qualify. If you qualify, the government will pay 55% of your salary, up to $47,400. This is about $500 per week. Some companies offer awesome benefit programs that will top up this parental leave to a higher percentage (say, 75% or $683). If I was working for a company that didn’t offer this awesome perk, I’d try and save the difference myself.
I’d also save an extra cash cushion for the lag period where I’m off work but before the parental leave kicks in. Their website says it takes 28 days. I’ve heard from friends that it could take as long as two MONTHS to start receiving parental leave. I don’t know about you, money is the last thing I want to worry about after giving birth.
University tuition seems to be rising exponentially lately, so even if my kid could make it through school on just student loans, I wouldn’t want her to. Due to this, I’d make sure that I have room to regularly contribute to an RESP for the little rugrat.
Money for Stuff
This section contains two suggestions that came from my two sisters, both of whom are pregnant with their second babies at the moment. The first is that I don’t need to spend that much outfitting my home for the baby’s arrival. Expensive things like changing tables can be swapped for a simple changing pad on the floor. I don’t need the fanciest stroller out there (they all have to conform to the same safety standards) etc. So, while I’d want to have plenty of room in the budget for the essentials, I don’t think I’d worry about saving thousands to outfit my home for a newborn’s arrival. For the little essentials, I’d either have a baby shower and/or setup a baby registry to get everything that I needed.
The other suggestion is to have extra room in the budget for unexpected expenses. For example, when your toddler has a cold and you need to buy a dehumidifier, you probably need it immediately, not in the next budget. I’d want to make sure that my budget isn’t stretched to the max. I’d want to have plenty of wiggle room for unexpected expenses.
Can you be financially ready to have a baby? Yes. Deciding to have children is a huge decision, and shouldn’t be based on emotions alone, it should also be based on the cold hard facts of whether or not you can afford all of the expenses that come along with having children. I know I’m definitely not ready to have children (philosophically, emotionally and financially) and because of that, you can rest assured that this blog won’t turn into a mommy blog any time soon.
What changed for you finances when you had children? I want to know!