Financial Planning for a New Baby: Can You Afford to Have Kids?

The arrival of a new baby will have a major impact on your finances. Ideally, you should discuss your financial situation with a financial consultant several months before the new baby is born, rather than leaving it until after your child's birth.
 
If one parent decides to give up work, even for a short period, your family is going to lose a significant amount of income. Consider what might happen if the main wage earner dies or becomes incapacitated. To help protect against financial catastrophe life insurance and individual savings accounts are vital, preferably for both parents.

Child Rearing Costs

Few parents make detailed long-term financial calculations before starting a family. Besides the cost of food, clothing, childcare and housing, the costs associated with schooling need to be considered, particularly if private education is under consideration. Bear in mind, too, that an increasing number of children are going on to college, or some form of higher education, so you may find yourself with financial commitments beyond your child's high school graduation.

Financial Planning for Your Child's Future

If you are in the fortunate position of having a lump sum to invest for your child, consider setting up a trust fund on her/his behalf that will provide funds when they reach a certain age. Most accountants and financial consultants will be able to give advice about trust funds.
 
Alternatively, consider some form of long-term savings plan, such as a savings account, certificate of deposit (CD), or education IRA. Talk with a financial consultant to find the most appropriate and tax efficient scheme for your circumstances.
 
Whatever your situation, your financial burden will be eased if you plan ahead for your child's future.