When you start the journey of growing your family, you’re taking on responsibilities that you’ve never had before. During this exciting and stressful time, it’s important that you stay focused on your long-term goals. Below are some ways to help you become financially ready for your growing family.
Does your current living situation have enough space to accommodate your growing household? If not, you’re going to need to start looking for a more appropriate place to live.
The first question to ask yourself is “should I rent or buy?”
Renting is great for shorter terms, and allows you to move more frequently if need be. Buying a home is perfect for a more permanent lifestyle and allows you the freedom to customize your home to your liking.
A 15 year mortgage requires a higher monthly payment, but with a lower interest rate, so you pay less long term. A 30 year mortgage is just the opposite and requires a smaller monthly payment with a higher interest rate. Make sure to do your research to determine which one is better for your lifestyle as well as your wallet.
Once you’ve decided on the type of housing that works for you, you’ll want to explore neighborhoods that are family-friendly. Research local school districts and community activities to better understand what each neighborhood has to offer.
It’s also highly recommended that you visit these areas in both the daytime and nighttime, as some neighborhoods may be less safe when the sun goes down. Another tip is to seek out local parents and speak with them about their overall satisfaction with the area, because who would know better than people that already live there.
Update Your Budget
Growing your family is one of life’s most fulfilling gifts, but it’s also very expensive. Whether you’re having a traditional birth, adopting, or any other option, there are huge costs associated. It’s crucial that you update your budget to include all of these costs as soon as possible to help ease the burden of hospital bills, adoption fees, or any other costs.
When updating your budget, remember that you’re no longer just providing for yourself and your partner. You’ll need to factor in things such as child healthcare, insurance, and daycare. These costs can take a huge toll on your monthly budget, so it’s important to be prepared.
This is also when you’ll want to start planning for your child’s education. Depending on your state, you can look into a 529 plan. These are similar to a 401(k) and allow you to invest money and save long term for your child’s higher education.
Reduce Overall Debt
I know, easier said than done, but reducing your debt doesn’t have to be as difficult as it sounds.
Take an inventory of all the debt that you currently owe, as well as the interest rates associated with each one. A common strategy is to pay off the debt with the highest interest rate first, which allows you to pay less overall long term. It’s important that you remain up to date on all of your other monthly payments as well and at least make the minimum payment to avoid any fees. Once your highest interest debt is paid off you can move onto the next highest until eventually your debt is more manageable or even gone.
Another method is to take out a consolidation loan. These loans combine all of your debt into one simple monthly payment with a fixed interest rate. The good thing about this technique is that you only have to make one monthly payment so it’s easy to keep track of.
Taking the time to dive into your finances and accommodate your family’s growth is crucial for long-term financial stability. Finding the right place to live, updating your budget, and reducing your debt will all help you during this process.