How to Know You’re Financially Ready for Children

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Being financially ready for children is a big reason many couples wait to have kids until later in life. How can you know when the time is right for you?

My grandparents always told me, “We never worried about having enough money for children. We just had them and made it work!” However, today, finances seem to be one of the major issues holding people back from having children, aside from perhaps a desire to be more settled, own a home, or get further in a career.

My husband and I had the conversation about when to have children a million times. Given his chosen career path (medicine) there didn’t seem to be a time that we’d be financially ready for children at all. Either he was poor medical student, a poor resident, or a brand new physician strapped down with $400,000 in student loans trying to pay them back. Anything past that and I’d be pushing it in terms of my age.

Not seeing a time when we’d be financially ready for children, we decided to have them now (or rather, a few months ago) even though he’s still in school. We didn’t make the decision lightly. In fact, we planned our finances quite a bit and worked really hard to save $10,000 before our twins got here.

10 Signs You’re Financially Ready for Children


If you’re in the midst of that conversation about when you’ll be financially ready for children, here’s my ten cents on signs that indicate you might be ready for kids.

1. You can pay all your bills on time every time. You aren’t worried about living paycheck to paycheck.

2. You have an emergency fund that will cover major issues like home repairs, car accidents, and layoffs at work. The emergency fund is in a secure location and isn’t being used for anything else.

3. You understand your health insurance policy and have calculated the amount you need to save for your heath care professional’s fee. You’re ready to call and do battle with the insurance company if they decide not to cover something.

4. If you are planning to be in a hospital for the birth, know an estimate of how much your stay will cost, keeping in mind your hospital bill is somewhat negotiable at the end.

5. Consider unforeseen issues, like NICU stays. Even though I knew multiples often came early, I still wasn’t prepared for the high NICU bill or the fees of the eight different physicians who took care of my children over a two week period. I’m happy to pay the fees for those who were responsible for my babies, and I saved money ahead of time, but I wish someone would have let me know about those possibilities and the associated costs.

6. You know how much childcare in your area will cost. You’ve run the numbers and are comfortable paying for it in addition to paying all your bills on time. You know how much sick time you can take from your own work if you need to take a sick baby to the doctor.

7. You have life insurance and have an updated policy.

8. You can afford diapers, clothes, and formula if necessary. You are ready for a myriad of issues that might require prescriptions. If you need help, read our guide on how to get free baby formula samples to stretch your budget.

9. You feel secure in your investments and believe you will be able to continue investing even though you have a child.

10. You understand that you’re going to fall head over heels in love with your baby and you’re going to want to buy them anything and everything. They’ll tempt you to break your budget every step of the way!


What am I missing? What else should you have in place financially before you have a baby? Do you feel financially ready for children? What helped you arrive at your conclusion? 

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Catherine Alford is the go to personal finance expert for parents who want to better their finances and take on a more active financial role in their families.


  • debs@debtdebs says:

    You’ve factored the cost of child care into your budget, if you foresee needing to continue working.

  • Laurie @thefrugalfarmer says:

    Awesome post, Cat, and I think you guys were wise in realizing that although there are factors like those listed above that really should be in place, there is not really a “right time” to have kids from a financial standpoint as one can always find a fear/excuse to wait. You guys did it right and had a great financial safety net in place – way to go!

  • Amy says:

    Great points! My husband was laid off when my daughter was two months old. I wasn’t working for the foreseeable future at the time, and he’s by far our primary earner. Fortunately, he found a new job pretty quickly, but those were easily the most stressful two weeks of my life. So, yes, an emergency fund is even more important when there are kids.

  • Gretchen says:

    These are great Cat, and they do a great job of applying to everyone! You’re never truly 100% ready to have children, and in our case we were kind of thrown into it. Out situation wasn’t perfect, but it could have been worse πŸ™‚

  • Kim says:

    We were in a bunch of debt when our daughter was born. It did give me the kick in the pants necessary to finally put it away once and for all, but I’d advise against starting with all that against you. Because I knew we had payments and obligations, I went back to work pretty quickly and it took several years to be able to work a better schedule. I’d do it all over again because I was getting old and the clock was ticking, but we certainly had our challenges!

  • Holly@ClubThrifty says:

    I am working on a post on this exact topic for GRS right now! We were clueless when we had our first child, but I think having kids made us get serious about our finances. I honestly think there is never a “perfect time” to have kids regardless.

  • Grayson Bell says:

    My goal before we had our son was to make sure I was out of credit card debt. I reached that goal and my son was born 5 months later. It worked out for us.

  • Broke Millennial says:

    Debs pointed out childcare and I agree. You’re in a fortunate situation to be able to work from home, so you can be the primary caregiver while still making a significant contribution to the family honeypot. It doesn’t seem like a lot of couples do that, plus paying for childcare can be almost as much money as what one partner is bringing in!

  • Emily @ evolvingPF says:

    I’d like to reframe this as “how to financially prepare for your first child.” That seems more proactive. We have decided when we’ll start trying to get pregnant, so we’ll just try to get our finances in line before that point/during pregnancy – the finances won’t dictate the timing. Although we aren’t in the same type of financial situation as you and your husband, we too realize that the financial timing will not seem right until the biological timing is becoming risky.

    • Cat says:

      Re-frame away – I like that! πŸ™‚ And yes too bad about the biological clock thing. It was annoying for me to realize that!

  • Shannon @ Financially Blonde says:

    I would say that you are ready when you are living within a budget of $1,000 to $2,000 less than you were expecting a month. Between childcare costs, medical costs, back to school, education, etc. on average, this is about how much kids wipe out of your monthly budget. If you can swing this, still have savings and can plan for your own retirement, then you are there. I wish I lived like this while we were trying to get pregnant, we would have had an even bigger cushion to fund our little net worth killer. πŸ™‚

  • Jefferson says:

    Many people like to say “If you wait until you can afford to have kids, that you will never have them”.. and there is something to that.

    Something about being a dad just lights a fire under me to find new ways to earn income, and to make sure that I can provide for my little ones.

  • Kassandra @ More Than Just Money says:

    In addition to the points you raised, I think it would be good to re-evaluate one’s current spending to see if some categories can be reduced and the savings directed at upcoming expenses relating to children. It’s never a perfect time to have kids but the more your financial ducks are in a row, the easier it will be to handle a growing family.

  • Shannon @ The Heavy Purse says:

    It seems like people tend to either not consider finances at all or almost over think them to the point where they can never afford them. πŸ™‚ We were in a financially good place when I had Lauren, but even then, there were times when I had sticker shock. It’s important to plan and definitely have that cushion for those unplanned expenses, especially medical bills because you don’t know. And #10 is probably the hardest rule of all. πŸ™‚

  • Aldo @ MillionDollarNinja says:

    I think we’re financially ready to have kids, but I really don’t think we’re emotionally ready for all it takes to raise a child. We decided to have kids in two years because we’re getting older and I guess it’s time, but I can’t imagine having the time to take care of myself and a child. I guess if other people can do it, so can I.

    • Cat says:

      I don’t think you can ever be emotionally ready either – it’s a sink or swim thing I think! You’ll be great!

  • Ben @ The Wealth Gospel says:

    We’re having a baby in February and our emergency fund isn’t anywhere near where it’s supposed to be, but we’ve struggled to get pregnant for a few years now, so we felt like it was better to get one when we can rather than waiting for the perfect financial moment and end up having to wait a few more years.

    But fortunately I make enough for my wife to stay home with the baby.

  • Erin @ Journey to Saving says:

    I definitely don’t feel financially ready to have a child. We’re leaning more toward not having kids, but just in case, I’d prefer if our student loans were done with before considering it. Thankfully we still have a little time to decide and save up! There are so many little factors you listed here that I haven’t even thought of.

    • Cat says:

      Also a great choice – you can travel go out to eat enjoy your life etc without getting puked on. πŸ˜‰ You have plenty of time!

  • Roger@The Chicago Financial Planner says:

    Great post and I agree with you. As the parent of three (26, 23, and 21) I can tell you the best laid plans in terms of what kids cost should be inflated, but kids are a great joy and it is wonderful to see them grow into the wonderful young adults they’ve become.

  • Autumn @ The Barefoot Budgeter says:

    Whew – I got a 10/10. It’s go time :). My finances are still not perfect, but I think we are at a point where I know we can afford it with a little left over.

  • catherine says:

    Like you we were also in a position where we realized we were in a bit of a crappy situation with money (ie debt) and there wasn’t going to be a ”better” time for kids for many years so we bit the bullet and took the bull by its horns so to speak. Next kid will and have required much more planning πŸ™‚

  • Travis says:

    I really like that you mentioned #3 – many people don’t have a good grasp on how their medical insurance works. Having that knowledge is SO important when you’re having a baby – starting out with potentially thousands of dollars in hospital bills isn’t a great way to start our your parenting journey.

    • Cat says:

      It’s true. We definitely faced that and more. I still need to move things around to pay for one more and am battling insurance over another one. Crazy and annoying!

  • Daisy @ Prairie Eco Thrifter says:

    Reading all of these would indicate that J and I are ready for kids, since we can check them all off (except for the expensive hospital stays and unforeseen costs like NICU since we’re Canadian), but we’re not even close to being there. We are financially prepared before being mentally and emotionally prepared which I think is probably better than vice versa.

  • dojo says:

    PROPER pregnancy care and birth cost me A LOT, especially compared with what people in my country usually make. Only by running a successful international business (getting paid in dollars and Euro) allowed me to have the funds for such thing. Let’s say that many people here don’t earn in a year as much as I had to pay for my birth + the stem cells collection.

    We waited will we were indeed ready. Have been together for more than 10 years, both run businesses, we can afford the baby and can also spend time with her, since our businesses are home based.

  • Myles Money says:

    Great article. It really shows how having a child is very much a financial decision now. It really makes you consider how money and debt can affect every aspect of our lives.

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