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"There's never a perfect time to have a child."

That's the advice a friend gave me when he was sharing how he and his wife had decided they were ready to start their family. I was surprised by their decision. We were all in our mid-20s, working the same job, earning the same modest salary. They didn't have trust funds or family money to fall back on. But somehow, they felt ready to take the plunge into parenthood.

"No house, income, or savings will ever feel like enough — more would always be better," he said. "But all you really need is enough to securely provide the basics, support from friends and family, and to feel like you're emotionally ready. If you wait for perfect, you could be waiting forever."

It's advice that has always stuck with me — although I wasn't sure if I agreed with it. Wouldn't it be much nicer to have a house with plenty of room, an income to cover every possible expense, and enough in savings to know you'll never have to worry?

Years later, when my husband and I started thinking about starting our family, we played it a little safer. Even though I made enough to cover our expenses and then some, we wanted to wait until he had passed the bar and secured a job at a law firm. We had just bought a house with almost too much room, were in close proximity to family and friends, and both felt emotionally ready for this new chapter. Securing that second income was the last thing we needed. Then we would be totally prepared to have a baby.

One single baby.

And then we found out we were expecting twins. The first ever on either side of our families.

It was a shock, and while we felt pretty prepared for one baby, the thought of two brought on a wave of panic. Suddenly, our careful planning felt incredibly shaky. How were we going to pay for two of everything? Two daycares? Two cars? Two college tuitions? So much for perfect.

Today, the twins are a little over two years old, and as we've navigated parenthood, we've realized that not being perfectly prepared really was okay. My friend was right — you can thrive as long as you have enough to securely cover the basics, plenty of help (so much help), and the emotional readiness to embrace the joy alongside the chaos.

But — and this is the critical part — only because we did the financial prep work.

Had we walked into parenthood completely unprepared, thinking, "We'll be fine as long as we have the basics, love, and support," then finding out we were having twins would have been a disaster. It's not about having a perfect financial plan or some magic savings number. It's about doing the groundwork — understanding the financial changes ahead, making sure we weren't blind to the costs, and having a plan in place.

That preparation is what saved us from chaos and overwhelming debt.

Now, let's talk about how you can start preparing, so that when the time comes, you'll be ready for whatever surprises life throws your way.

1) Start with an Honest Conversation About Money and Life After Baby

The first step in your financial journey toward parenthood is sitting down with your partner and having an honest conversation. This isn't just about dollars and cents — it's about how having a baby will change your lifestyle, routines, and priorities. You need to be on the same page when it comes to how you'll handle both the financial and logistical aspects of raising a child.

What's your plan for child care?Will one parent stay home for an extended period of time, or will both parents continue working? If both of you plan to work, do you prefer to hire a nanny or send your child to daycare? These decisions are major factors in how much you'll need to budget for care, and if you're leaning toward daycare, it's wise to start researching early. Waitlists can be long, so if you find a daycare you like, get your name on the list sooner rather than later.

How will your lifestyle change?If you and your partner are frequent travelers or enjoy certain hobbies that come with a price tag, you'll need to think about how to adjust your budget once a baby arrives. For example, will you still be able to travel as often, or will your vacations shift to something more local and child-friendly? These lifestyle changes might not seem like big decisions now, but they will help you set realistic expectations for the future.

Having these conversations early will help ensure you both have a clear understanding of how life will change after the baby is born. It's also essential to talk about financial goals like saving for your child's education and how you want to manage your household income in the coming years. Whether you choose to set aside money for college or take a different approach, aligning your vision early will make these decisions easier down the road.

2) Understand How Much a Baby Actually Costs

While love and support are the most important pieces to raising a child, it's still important to understand the very real costs associated with raising a child.

As of 2022, the average middle-income family could expect to spend between $16,007 and $17,141 on child-related expenses each year. For newborns, the cost can be even higher. When you factor in healthcare, including the cost of delivery, estimates range from $9,300 to $23,380 per child, depending on where you live and your household income.

(If this amount sounds insane, I recommend checking out this blog post, where a family in Pennsylvania details every cost they incurred their first year with a newborn.)

In the planning stage, it's a good idea to start researching what your health insurance covers. For us, checking our insurance policies before the twins arrived was a lifesaver. We looked into prenatal care, delivery costs, postnatal care, pediatrician visits, and even potential specialist visits. Although my original health insurance plan had a lower premium, the out-of-pocket costs were much higher. Switching to the higher-premium plan with better coverage ended up saving us a significant amount of money in the long run.

It's also worth looking into the cost of daycare early, especially if both parents plan to work. Daycare fees can vary widely depending on location, and you'll need to make sure your budget can handle these monthly expenses. Additionally, even if you don't plan to use formula, it's smart to include it in your potential costs. We thought we wouldn't need it but ultimately had to supplement, and it was good to know the costs upfront.

Don't forget the small but consistent expenses like diapers, wipes, and baby gear. These items can add up quickly, so it's important to get a sense of what you'll need and how much it will cost. Even if you're not ready to start buying baby supplies just yet, having a budget in mind will help you prepare for the financial impact of your growing family.

3) Build a Strong Financial Foundation

Even if you're still in the early stages of planning or trying to conceive, now is the perfect time to strengthen your financial foundation.

One great way to start is by setting up a "baby expenses" sinking fund. A sinking fund is a dedicated account where you set aside money for specific upcoming expenses — in this case, baby-related costs. You can start small, contributing a little bit each month, but by the time the baby arrives, you'll have a pool of money ready to cover those initial costs, from hospital bills to the first round of baby gear.

Another key step is addressing any high-interest debt you might have. If you're carrying balances on credit cards or other loans, now is the time to make a plan to pay them down before the baby arrives. Reducing your debt load not only decreases your monthly financial obligations but also frees up more of your income for baby-related expenses and savings. The less debt you have, the more financially flexible you'll be.

Of course, building up your emergency fund should remain a priority. Having at least three to six months' worth of living expenses saved can give you a financial safety net if any unexpected expenses arise during your pregnancy or after the baby is born. Whether it's an unplanned medical bill or a sudden job change, having this cushion will help you manage the unexpected without turning to debt.

4) Focus on Cash Flow, Not Just Savings

While it's important to have some savings set aside, cash flow is the real key to managing the ongoing costs of raising a child. Babies bring constant expenses — diapers, formula, clothing, and eventually bigger-ticket items like daycare and extracurricular activities. So, it's essential to maintain strong cash flow, meaning the money coming into your household on a regular basis is enough to cover the added expenses that come with parenthood.

A good way to think about it is to evaluate your current budget and see where you can free up extra cash. Are there any non-essential expenses you can cut back on? Things like dining out, subscriptions, or unnecessary purchases might take a back seat once you factor in baby-related costs. The more flexible your cash flow, the easier it will be to absorb the regular expenses that come with raising a child.

Remember, the goal is to ensure you have enough room in your budget each month to comfortably cover both your existing financial responsibilities and the new ones coming your way. Keeping expenses off high-interest credit cards is important, too. While it might be tempting to use a credit card for baby-related purchases, the interest can quickly add up, reducing the money you have available for saving or investing. Focus on keeping your debt levels low and your cash flow strong.

5) Consider How Insurance Can Protect Your Growing Family

As your family expands, your insurance needs will change. Protecting your family financially becomes more important than ever. While it's not something you need to act on right away, now is the time to start thinking about reviewing or updating your life and disability insurance policies.

Life insurance is particularly important once you have children. If something happens to you or your partner, having a life insurance policy in place will help ensure that your family is taken care of financially. Disability insurance is equally important, especially for covering lost income if you're unable to work for a period of time due to illness or injury. In my case, I opted into disability insurance at work just in case I needed to take a longer leave than planned, which provided peace of mind.

It's a good idea to research what policies might work best for your growing family and to make sure that whatever coverage you have is enough to protect against the financial risks of raising children. While you might not need to make changes immediately, having these conversations early can prevent future stress.

6) Don't Forget About Your Long-Term Goals

Even though having a baby will likely change many of your financial priorities, your long-term goals shouldn't be forgotten. Saving for retirement, for example, is still crucial, and it's important to keep contributing to your retirement accounts even with the new expenses you'll face as a parent. After all, the last thing you want is to sacrifice your future security while focusing on your growing family.

It's also a good time to revisit other long-term goals, such as saving for a home or paying off student loans. Balancing these goals with your immediate needs as a parent can be tricky, but it's not impossible. For example, automating contributions to your retirement account or setting up a monthly payment plan for debts can help ensure that your financial future remains on track while you manage the day-to-day costs of raising a child.

You don't have to choose between your child's future and your own. With careful planning, you can set aside money for both without feeling like one goal is getting sacrificed for the other.

You're Never Fully Ready, But You Can Be Prepared

The truth is, no one ever feels fully ready to have kids. There will always be some level of uncertainty, and the reality of parenthood will likely throw you some curveballs along the way. But that doesn't mean you have to walk into it completely unprepared.

Taking the time to have honest conversations, understanding the costs, and creating a financial foundation will ease much of the stress and anxiety that comes with starting a family. While perfection isn't necessary, having a plan in place will help you navigate the challenges without overwhelming debt or financial chaos. With a little prep work, you'll be able to focus on what really matters — the joy and happiness that comes from welcoming a new life into your family.