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Reprioritizing Financial Commitments When Starting a Family

Reprioritizing Financial Commitments When Starting a Family

The conversations surrounding family expansion are detailed and there is a lot to consider, it should come as no surprise that money is near the top of the list. Adding another person to the family dynamic is going to force you to reevaluate your budget and find areas that can be manipulated to accommodate this growth. Although this is a serious consideration, do not let that overshadow the excitement surrounding this transition. With some careful planning and self-discipline, you might even be able to find ways to free up cash in your budget without feeling the strain of having readjusted it. 

Start with What You Have

Before you tear apart your budget with costs and figures based off what you assume might change once you grow your family, start with what you know. Your current fixed bills, mortgage, car loan, outstanding debts, are all areas to examine since they are present now and will still be as you move forward. A car loan is a great opportunity to play with numbers. You can refinance your car loan in order to save money, and that saved money can be allocated towards general savings or a new branch of budget once you have transitioned to a larger family unit. Interest rates are constantly evolving so it is very possible that the rates under which you signed for your loan are no longer the most favorable. Not all lenders offer refi opportunities, so shop around to see if you qualify. Taking a glimpse at where you can make financial adjustments from the inside out is a good plan of attack since these are all costs and areas that you are already familiar with.

Downsize Extras

It is understandably bittersweet to identify parts of your life that will have to cease or drastically change after the addition of children. However, try to focus mostly on the sweet. Places your money used to go like, concerts, vacations, and sporting events, does not need to completely halt, but to think they do not need to be considered as areas to downsize is naive. The good news is that realizing that you can afford to expand your family with the funds you already have can be a huge relief. Tracking expenses and then allocating the funds that were previously all spent on all the extras in your budget towards the pending costs of having a child can outline this for you.  

Understand Your Coverage

If this expansion is your first child, make sure to read all the fine print regarding your health insurance. Jumping to the family plan can be pricey, but there is almost no better investment than good insurance. The cost and risk associated with even just the appointments during pregnancy plus the actual labor and delivery are virtually unaffordable if attempting to pay out of pocket. Use the resources available to you, like your providers customer service department, to understand exactly what your existing policy covers and how it will need to be tweaked to accommodate your growing family, and what you can expect that cost shift to look like.

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