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Four Questions To Consider As You Plan To Have Kids

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The decision to start a family is an exciting time for many couples. Whether you adopt or have a biological child, adding a new member to your family brings joy, challenges and new financial responsibilities. We asked Rockland Trust Investment Management Group, Vice President & Financial Planning Officer Theresa (Terry) Becker, CFP® about the top four considerations for parents-to-be.

Are You On The Same Page?

The key to any strong relationship is solid communication. It’s important to ask yourselves if you and your significant other are on the same page. The need for open communication goes beyond simply “do you both want to have children?” A relationship where one person is an analytical budgeter and saver, and the other is a spender can work if the partners are open and honest in conversations about money and finances.

In fact, communication should encompass all aspects of a life together, from finances to discipline tactics and everything in between. There is an emotional impact to having children, as your priorities evolve and the dynamics of your relationship change. Clear and consistent communication is the foundation to any strong relationship and navigating any relationship changes over time.

Do You Have An Accurate Picture Of What It Costs To Raise A Child?

While there is no specific formula to determine how much it costs to raise a child, some estimates say it can cost up to $250,000 to raise a child from birth to 18 years. Two common costs people cite are daycare and college, but don’t forget about clothes and food. Teenagers with “style” and growth spurts can be expensive.

“In terms of college, costs have risen faster than inflation. So really, no matter how early you start saving, it’s possible you will underestimate the costs of secondary education,” said Terry. “There are a number of different vehicles for saving for education, like 529 plans, Roth IRAs or even typical savings accounts. It is best to speak with a financial consultant to determine what is best for your family’s needs.”

Many new parents also find the costs of daycare to be higher than they anticipated - in Massachusetts, the average annual cost of daycare for an infant and four-year-old can exceed $34,000. As you plan to have kids, be sure to research these costs fully.

Can You Make It Work Financially?

Starting a family can be expensive, but you can more easily navigate any challenges if you carefully consider the impact on your finances. For instance, can your family live comfortably on one income? Some families choose to go this route due to the costs of childcare.

While it’s true that having kids adds responsibilities and financial considerations, it also may alter how you spend your money. Where you previously went out for dinner or drinks, you may want to be home for bedtime instead. Looking holistically at your financial picture can help you determine the best path forward for your family.


Is Your Family Prepared For Any Situation?

No one wants to think about the possibility of something unexpected happening, but it's important to ensure that your family is protected, especially if you have children.

For example, you will want to have wills prepared and name a guardian which designates who will take care of your children should anything happen to you and your partner. You also should consider purchasing life insurance. Life insurance is designed to replace income and cover debts, and is an important lifeline should something unfortunate happen.

“These two protections are vital, even for young parents, to set up,” says Terry. “You hope to never have to use it, but it’s great to have in place just in case the unexpected happens.” 

We have served families in Massachusetts and Rhode Island for years. Our bankers are here to assist with the financial parts of your life, like buying a home, talking to your kids about money, planning for retirement and saving and budgeting. Check out our Learning Center for additional helpful articles.

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