Career & Finance

How to Financially Plan to Expand Your Family, According to Experts

Source: ColorJoy Stock
Source: ColorJoy Stock

Life can be unpredictable. Life with kids is even more so. We can go from planning a fun family trip to listening to our toddler scream in their car seat. Although we can’t plan for everything, it doesn’t hurt to prepare for certain goals we have. For those who are interested in expanding their family, creating a financial plan may be something you’re considering. Trust me. I get it.

My son wasn’t planned, which caused my partner and me to become serious about our finances. We were fortunate to have common financial goals for our family, but that wasn’t without trial and error. Now that our son is 18 months old, we’ve started conversations about trying for baby #2 and want to be more financially prepared.

If you’re wondering what you should discuss with your partner—or consider if you’re not in a relationship—when hoping to expand your family, we spoke to financial experts Naseema McElroy of Financially Intentionally and Ashley Gerstley of The Fiscal Femme. Read on for their tips on financially planning to expand your family.


Why It’s Important to Talk About Family Finances

“Kids are expensive,” Naseema McElroy said with a laugh. “Not only that but, regardless if someone is planning to have kids or not, talking about your finances and being aware of them is essential for life.”

Like sex, money can be a taboo topic for people depending on their relationship with it. How we were introduced to money when we were younger can impact how we view it as adults. Ashley Gerstley said, “Sometimes we budget for things we’re not really experienced with.” This certainly goes for first-time parents realizing all the costs that come with a baby.

McElroy said parents sometimes feel pressured to buy the latest clothes or gadgets to care for their children. I can attest to this in my own life. My partner and I had several arguments during my pregnancy about products I thought I needed. (We later found out we didn’t need some of them.)

Even if you don’t have disagreements about purchases for the kids, the family finances will always be part of your lives.


What It Costs to Have a Baby

Your journey of having another child will come with costs. On average, the uninsured cost of giving birth to a child in the U.S. is $18,865. If you have insurance, plan to spend around $3000. Of course, this doesn’t include fertility treatments, NICU stays, emergency c-sections, childcare expenses, etc.

Additionally, McElroy and Gerstley recommend that parents begin looking at their jobs’ parental leave policies and checking to see if maternity services are covered by their health insurance. “Ideally, I suggest people have at least 3-6 months of expenses saved,” McElroy said. Gerstley agreed but wants parents to know it’s okay if they don’t feel prepared. She said, “Only 25% of parents feel financially prepared within The Fiscal Femme community.”


expanding family

Source: Jonathon Borba | Pexels


How to Financially Plan for Another Baby

Whether you’re in a relationship or not, McElroy said, “Thinking about adding more children to your family should make you stop and take a look at your finances.” You’ll want to audit your expenses and financial habits to know what changes you may need to make.


Consider Your Current Financial State

“There’s no power in avoiding your finances,” said Gerstley. “You have to look at them to not only see what’s happening in your bank accounts, but it also gives you an idea of where you’re headed.” She added, “Having money saved helps give people freedom of choice and peace of mind to make certain decisions.”


There’s no power in avoiding your finances.


In the case of my partner and I, we realized we were spending a lot of money on streaming services, DoorDash, and online shopping. Gerstley said thinking about having more children can exacerbate any tension couples have about their finances. “Typically, there is a saver and a spender, polar opposites, within a relationship. This can be due to different life experiences, fears, and family dynamics,” she said.

Being aware of your finances is essential if you’re planning to make a decision that will significantly impact both of your lives.


Start Building Common Financial Goals

“Having different financial habits than your partner isn’t a bad thing, nor does it mean you need to change them or vice versa,” McElroy said. It does mean you need to figure out your financial goals. “Once you have that understanding, you need to begin spending in alignment with them,” she said.

If you’re not sure what questions to consider to align your goals, Gerstley suggested starting with the following:

  • “What’s important to us [financially]?”
  • “What are the one-time and ongoing costs associated with having another baby?”
  • “What will our budget look like with the addition of one-time and ongoing costs?”

For example, having the baby would be a one-time cost when they are born. But raising the baby comes with ongoing costs like childcare, healthcare, saving for college, etc.


couple discussing finances

Source: MART PRODUCTION | Pexels


Find a Budget System That Works for You Both

From there, you and your partner can begin thinking about how to keep track of the budget you create. This may look different depending on your preferences, but you can utilize apps such as Why Now and Every Dollar. You can consider creating an Excel or Google Docs template if you prefer a more manual system.

“It doesn’t really matter what system you use as long as it works for you,” said Gerstley. “What’s important is being able to look where your money is going. If it helps, try to keep things as simple as possible.”


Shift Your Budget Mindset

McElroy suggested a mindset shift when approaching your budget. Think about what you want to do rather than what you can’t do.

When my partner and I stopped looking at our budget as a hindrance, it helped us become clear about our needs versus our wants. It can take time to change your perspective, but it becomes easier with practice.

If you find that conversations about your finances cause arguments or disagreements, Gerstley had a fun suggestion to try. “Two words: money parties.” Schedule time to look at your finances and note areas of improvement together. She said couples could help set the tone for their money parties by listening to a curated playlist featuring songs about money and drinking a glass of wine. “Once the money parties end for the day or night, couples can ‘reward’ themselves with [something like] date night or by watching their favorite TV show,” she said.

9 Financial and Legal Things To Do Before and After Your Baby Arrives
Click to Read