As millennials, we’re now hitting that point in our lives where we’re under a lot of pressure to either start a family or expand our existing family. We’ve all got those family members who take the opportunity to start a conversation about your biological clock at any opportunity. For people thinking about starting a family in today’s world, it’s less about biology and more about finances. What money goals should you make sure you hit before starting a family?
1. Have A Career
Before you start a family, you don’t want to have just a job — you need a stable career. This doesn’t mean that you have to hold the same position for the rest of your life — quite the opposite in fact. A career in today’s market doesn’t mean that you stay in one job or even with one company until retirement. You can move from company to company within your chosen field while still maintaining a stable career.
The trick to moving between jobs while maintaining a stable career is making sure that all of your moves are either lateral — you’re changing companies but still receiving the same money and benefits — or move upward.
2. Savings Are Essential
Do you have a savings account? Actually, let us rephrase the question — do you have a savings account that actually has some money in it? If the answer is yes, you’re ahead of the curve. If the answer is no, that’s one more hurdle you should overcome before you consider starting a family.
There’s nothing worse than getting caught with your financial pants down if you come across an emergency or even just an inconvenience that requires money to rectify. You need a savings account for things like broken down cars, failing appliances, or home repairs that might crop up — just to name a few. Ideally, you should try to save at least 3-6 months worth of bills and expenses so you’re covered if someone is out of work for a while, but if that isn’t possible, try starting small — a ‘baby’ emergency fund of $1000 to keep you covered.
3. Invest in Retirement
If you’re thinking about starting a family, retirement funds are probably the last thing on your mind — you’ve still got 20-30 years before retirement or more, right?
This is actually the perfect time to think about your retirement. You should have a stable retirement fund set up that you contribute to on a regular basis. This is your nest egg when you finally leave the workforce, so you don’t end up with your kids supporting you into your old age.
Your place of employment may even offer a 401k that you can invest in directly from your paycheck — some employers even match your investment up to a certain amount. If that’s the case, take advantage of it but read the fine print and make sure your money is transferable if you leave the company in the future.
4. Think About College
College is expensive, and we’ve all heard about how important it is to set up college funds for our future offspring, but how much money should you be putting in that fund?
In 1995, the average in-state tuition for a public college was around $2500. By 2015, that amount had climbed to nearly $10,000, reaching nearly twice that in some states. Experts predict that if tuition costs continue to climb at the rate they have in the recent past, even as little as 2% a year, that same 4 year degree at a public college could cost nearly $70,000 in 25 years.
Look into the best type of college savings plans for your needs — your needs will vary depending on your income and the number of children you are saving for. Investments are risky because of the nature of the stock market, but 529 College savings plans, prepaid tuition plans, and IRA accounts are all options to consider. Some plans also offer interest so you’ll make money back that can help increase the amount of your savings account.
Don’t let these milestones prevent you from starting a family — these are merely suggestions of hurdles that you should overcome before you start or expand your family in order to provide the best life for yourself and for your children.