Do you think having kids despite debt is okay or not?
For Millennials, it seems like they are not letting their debt situations hinder their plans of becoming parents. At least, this is true for the 1.3 million Millennial women who gave birth to their firstborn in 2015. This number reflects 8 out of 10 US births during that year.
We all know how expensive it is to raise a child. You should not only consider your physical and emotional condition. It is also important to consider your financial situation. You have to ensure that you can financially support the needs of your child so they can have the best life possible.
The thing is, Millennials do not exactly have the perfect financial situation. According to reports, this generation has more debt than ever – whether it is credit cards, car loans, mortgage, or student loans. They obviously have a lot of payments to meet. However, this did not hinder them from their dreams of parenthood.
It really makes you wonder – will debt really make life more difficult for you and your child? Or is it possible that having kids despite debt can lead to a happier life?
Without a doubt, having kids in your life will bring happier memories. There is no greater joy than to watch your child grow up healthy and strong. Admittedly, it will be more difficult because your expenses will increase significantly. But that does not mean you cannot afford to raise a child while you are paying off your debt. You just have to know the signs that you are financially ready to have a child.
Financial situations to afford having kids while in debt
There are certain signs that will tell you that you are financially ready when it comes to having kids despite debt. Here are some of them.
Secure career
Obviously, you want to have a stable income so you have regular money coming in to pay off your needs. If you have debt and your source of income is not secure, hold off having a child for now. You need to secure your career first before you can think about having a baby. If you are unemployed, you should not have a baby because it will be unfair for you to bring that child into this world if you cannot afford to support their needs financially. Take note that the employment should not be something that will be terminated in the near future. It should be a career that can support your growing family for a couple of years.
Sufficient emergency fund
Another thing that you need to have is an emergency fund. While this may not be as important as the first one, it will still come in handy. What your emergency fund will do is to secure your finances so you can face unexpected events and expenses and survive. Especially if it is your kid that needs to be rushed to the hospital. You want to make sure that you have enough reserve funds to pay for what you need when it is most relevant. Not only that, in case your job is compromised, you should have at least 3 to 6 months worth of reserve fund to live on.
Monthly disposable income
Having kids despite debt is also okay if you have some disposable income left over after you pay off debt and the other financial obligations that you have each month. Remember that your child will need to be spent on. You have to pay for milk, diaper, doctor’s appointments, clothes, baby equipment, etc. A lot of expenses will be added to your monthly budget. Without this disposable income, you will be forced to stop spending on some of the things that you used to. After all, you will start prioritizing the needs of your kids after you have them.
Updated retirement contributions
You should also check your retirement contributions. It has to be on track and updated. Saving for your retirement is nobody’s job but yours. Make sure this is not something that you will compromise once you start having kids. The truth is, some parents are forced to prioritize spending for their kids rather than save up for retirement. This is not always a good move. But if that is a possibility, you might as well contribute as much as you can while you still do not have any children.
Ability to save for college
We all know how college can ruin the finances of our kids. This is why it is advisable that you try to save for college on behalf of your children. The rising cost of getting a higher education is bordering on the extreme. You do not want to risk your kids skipping college just because they cannot afford it. This is why you want to help them save up for it.
The truth is if there is one thing that you need to be sure of – it should be your career. All the others on this list are nice to have. They will make your life and that of your child more convenient and comfortable. However, if you do not have a stable career – then that is the dealbreaker in your pursuit of parenthood. But the more you have from this list, the more it means you can start thinking of having kids despite debt.
Tips to strengthen your finances to prepare for parenthood
So while you are waiting for that kid, you may want to work on making your finances a little more secure. After all, you still have 9 months to prepare for your child and all the expenses the little one will be demanding from you. This will help make the transition easy to take. Here are some of the things that you can do to strengthen your financial position while waiting for your child to be born.
Have a debt payment plan
This will make your debt payments more structured and more likely to succeed. You can choose based on what you feel you can afford. If you want to save money, debt settlement might be a great idea. If you have a great credit score and you are certain that you can be approved for a low-interest loan, then go for debt consolidation loan. The important thing is to have a plan to pay off the debt so you will not miss a payment.
Live on one income and save the rest
It is also a good idea to start adjusting your lifestyle so you only live off one income. This will be really helpful if one of you intends to quit their job to take care of the kids. You will also benefit from the huge savings that you will get. Instead of spending the second income, you get to save it to prepare for the birth of your child. This will make your finances more secure.
Diversify your income
Finally, you have to make an effort to diversify your income. The savings that you will get from living on one income should be used wisely. Instead of saving it, you should invest it instead. According to reports, now is a great time to buy bonds. You can probably consider putting your money here. It will not give you the highest return but it is stable and can withstand a volatile market. Think about your options. That way, you have several sources of income. In case something happens to compromise your job, you still have another source to take care of your financial needs.
Having kids despite debt may be okay but you still have to ensure that you make an effort to improve your financial situation.