Quiz: Are You Financially Ready for Children?

Raising kids is a costly venture. According to a 2014 report by the USDA, middle class families will spend an average of $245,340 to raise a child born in 2013. Although many households spend less (or more), one factor transcends all income levels: planning. Whether you earn $40,000 or $400,000 per year, understanding your financial strength is imperative. So, are you ready for a family? Take the quiz to find out.

1. I have a monthly budget and I stick to it.
   • True
   • False
2. I have reviewed my employer’s maternity/paternity policies and can afford to take unpaid leave if necessary.
   • True
   • False
3. I can afford to budget co-pays and other baby-related expenses not covered by my insurance.
   • True
   • False
4. I have at least two months’ worth of savings in the bank.
   • True
   • False
5. My budget can afford an increase in utility, food and other household costs.
   • True
   • False
6. I have estimated the costs of childcare in my area and/or researched other alternatives (e.g., family help).
   • True
   • False
7. I have estimated the costs of baby’s first year: food, clothing, furniture, diapers, etc. and compared it to my budget.
   • True
   • False
8. At the end of the month, I am currently able to save at least 10 percent of my income.
   • True
   • False
9. I am constantly worried about money, unpaid debts and other financial burdens.
   • True
   • False
10. I can afford to save for retirement AND baby expenses.
    • True
    • False

Results:

Mostly True: Ready and Waiting

You have done the research and feel confident about starting a family. Although no one can predict the future, you and your spouse have made an effort to estimate costs, reexamine your budget and plan for additional expenses. Keep the momentum alive by challenging yourselves while in pursuit of kids. Increase your liquid savings, talk to a financial planner about retirement and how children will impact your long-term goals.

Equally True and False: Ambivalent Parents

You may want kids, but the logistics make you nervous. Maybe you are in the early planning stages, or your household income has recently changed. Whatever the reason, you aren’t quite ready to take the plunge, and that’s okay. Tip the scales by focusing on today’s issues, e.g. budgeting and savings while building a nest egg for the future.

Mostly False: Living on a Prayer

You want children, but your planning ends there. Whether you are struggling financially or haven’t done much research, it’s important to establish a strong plan before pursuing a family. In addition to budgeting, focus on:

• Debt reduction. Freeing up your income will reduce your burdens and stress level.
• Planning for emergencies, expenses and long-term goals is essential.
• Cash is king when it comes to raising kids. Review your resources and look for other ways to earn a living. Now is the time for change.