Should you pay off debt before having kids?
Parents often find themselves choosing between one or the other. Choosing between a child or having no children so to deal with debt and bills.
The truth is, you’ll never find the right time to have children. It’s a personal decision. Most people who seek the perfect scenario wind up never having any.
We’re here to tell you, you don’t have to choose one or the other. You can pay off debt while still meeting the financial demands that a child brings.
The Power Of Compound Interest
There’s an important key to understanding how this works. It’s called compounded interest. Most Americans don’t get the full benefit of savings without knowing it.
A little saved can have a huge impact when that money goes into investments. It means nothing to save if you’re only adding in the money you earn. Money has to then earn for you. So finding options like 401(k)s and Certificate of Deposits can be great ways. They enable little to do a lot for you.
Homeownership Before Pregnancy
Financial understanding here is simple. Paying a monthly mortgage is cheaper than renting in the long run. Having a baby in mind when you’re already a homeowner might be your most secure position. We don’t suggest that it’s impossible for pregnancies without homeownership though.
Homeownership helps to balance things in the juggling act . The one of preparing for kids and remaining committed to financial goals. Though you may lose more money upfront, it returns to you in the long run with a house. That’s in taxes, monthly costs and your options to sell the property within at least five years.
These variants are important. You may have difficulty paying off debt now. But the money you pay into your house incurs value overtime. This could justify paying more off on debt or even paying less with the onset of a child. You get the best of both financial management worlds when considering homeownership.
Improving or Starting Your Budget
This should be your first step if you’ve made the decision to have children. Know what your income is. Know what your monthly costs are. Know your limits. Track them weekly to get an overview of your progress or lack thereof. Once you do these things, you’ll know how to manage your money and make the most out of it.
Blatant Signs To Avoid
When analyzing your potential for children, look at the impossible. It’s important to not get carried away. Knowing that anything is possible with a team committed to the right goals isn’t enough. Deciding to have children under the most enduring circumstances may be a sign to wait.
Devise a Plan to Reduce Debt
Whether planning for children or not, a plan must be in place for debt reduction. Once you have a child, you can’t justify the child for why you don’t have a debt plan. More important than anything else is an existing motive. Nothing gets accomplished without expectations and laid out goals.
The common saying is that if you shoot for the stars and miss, you land upon the moon. If you don’t even create a plan for the tight situation you’ll be in, you’ll never incur a savings or pay off debt. The important step is that you don’t hide from the responsibility.
It’s easier to avoid saving and debt reduction when funds become tight with a kid around. This can’t discourage you. At the least, you must create a plan that accommodates your current resources. This can always change later and as things improve.
Consulting With a Financial Expert
You can rarely go wrong with more advice. Get as much as you can. Financial experts hold knowledge that can open doors and options for you. Most advice is circumstantial. So it’s important that you discuss your personal needs and resources. Coming up with ways to manage children and debt is the idea.
Knowing if it’s a Good Fit
That fact is, children are a mix bag within decision making. People pursue them for different reasons. We suggest that anyone can manage their finances and still have a child.
But maybe other factors exist that delays a plan for children.
We don’t believe that to “get financially by” with children justifies having them. That’s why looking at the bigger picture is necessary. The more factors you consider, the more you see. The more you enable yourself to manage correlating costs with child care.
If you and your partner are still in college, for example, it might be a bad time to have children. In this case, time is the issue. The lack of time in this circumstance will increase the cost that a child commands. If you don’t have time, interest or passion for children, it may be a bad financial decision.