Growing your family is one of the most exciting things to happen during the course of your life — bringing home your first adopted child (or second, or even third) induces so many emotions and will be an incredible experience you will always cherish. You and your partner are over the moon to be starting a family together, and you cannot wait to introduce your little bundle of joy to all of your friends and family. Even with all of the excitement and happiness you and your partner are feeling, it is important to recognize that there is going to be a major shift in your life once you bring home your child. Finances are not going to be the same as they were before your child was in the picture, and while you may have already mentally prepared for that, it does not mean you have financially prepared.
The average cost of adopting a newborn is in the neighborhood of $50,000, which requires many adoptive parents to save for a long period of time before bringing home their child. After making such a major financial decision, it is easy to get tired of constantly saving and being so money conscious. Even though the adoption process is done, as parents, you will still need to continue to make decisions in order to secure your financial future for yourself and your growing family. Here are five steps to help you secure you financial future after your newborn adoption.
Create a budget
Establishing a budget is a great way to make your goals attainable and start getting on track with bills, paying off credit cards and other debts, while putting money into your savings account. When you adopt a child, many new expenses pop up that you and your partner are not used to having. There is a new need for diapers, formula, clothing, and frequent visits to the doctor. As weeks and months go by, it becomes evident how much more money you are spending on these necessities than you originally thought. Some ways to establish a budget include; determining your household needs, addressing individual needs, and establishing a weekly budget meeting as a couple. A budgeting meeting with your partner may sound silly, but this will give you both the opportunity to discuss what is being spent, figure out areas where you both could cut back, or look into whether or not you have a little extra money to spend/save. This will ensure you are both on the same page, reducing or even eliminating disagreements about money.
Secure a life insurance policy
When couples decide to adopt a child, they most likely aren’t looking to spend more money on new expenses or add to their monthly budget. However, investing in a life insurance policy could help you and your partner secure your financial future. You may be thinking, “I don’t need a life insurance policy, I’m too young.” Or “we just adopted our child, let’s get on our feet for a few years first before taking that on.” However, it is better to secure a life insurance policy early on because when you secure a policy at a younger age, the rates are likely to be lower than if you wait a few years. Having financial safeguards set in place is crucial, especially when you are in a committed relationship and just adopted a child together, who will be dependent on your income. Life insurance coverage will allow your partner to have peace of mind knowing that if you suddenly passed away, they would have funds from your policy to help them cover the bills, take care of funeral costs, and comfortably raise your child without you there.
Set up an emergency fund
Emergency funds are always important, but they become way more important when you adopt a child. Having money readily available for a rainy day is something that many people do not have, which causes them to go further into debt when an unanticipated event arises. An emergency fund is put into place in order to cover unexpected costs, such as; emergency surgery, a broken bone, sudden illness, or the loss of an income in the household. Having an emergency fund available helps you avoid sinking during times when money is tight and allows you to have some flexibility when it comes to your future plans and investments. Do not let yourself and your family get into the habit of living paycheck to paycheck or putting unexpected costs on credit cards. Instead, establish an amount you want to save each month with your partner and make sure that you both make it a priority to contribute to it.
Make savings and payments automatic
If you want to ensure accuracy when it comes to your bank accounts and expenditures, you might want to consider automation. Automating your finances is a great way to save time, cash, and conveniently manage your money on the go. Most banks have mobile applications that allow you to set up automatic payments/savings, making it simple to make transactions or review your account balance from anywhere. You can also plan ahead and set up automatic payments so you don’t miss a bill or get charged a late fee for paying late on one of your monthly obligations. This is a great way to stay on track with your financial goals, and also a great way for you and your partner to hold each other accountable for the money that is spent.
Have honest conversations about money
Money is one of the most common things couples argue about. It can be a touchy subject, especially if bills aren’t split evenly, one partner spends more than the other, or there is secrecy surrounding purchases. 43% of Americans are hiding substantial credit card debt from their partner. When you hide money issues from your partner, it can cause even bigger problems down the road. Letting debt pile up is never a good thing, but if you are married and sharing accounts, your debt is also your partner’s debt. With that being said, you could be affecting their credit or savings without them knowing, making it more difficult for you both to support your child financially. This is why it is so important to face conversations about money head-on by having a discussion with your partner about your financial goals. This could be a little nerve-wracking at first, but it could ultimately end up making your relationship stronger and build more trust between you both.
Adopting a child and starting the next chapter of your life with your partner is such an amazing thing. It is important not to let this new phase cripple your finances, and you need to be sure that you are making all of the right financial decisions for yourself, your partner, and your child. Finances can be a scary subject, but with the right tools and proper communication with your partner, you will be able to secure a healthy financial future for your new family.