The decision to become a parent is an important step in an adult's life. Children can impact your life in many ways, and they will most certainly affect your finances. From daycare costs to an increase in medical insurance premiums to higher costs on groceries and clothing, becoming a parent doesn't come cheap. Here is a look at five things you should do financially before having children.

Maintain a Residence
Prior to taking the plunge into parenthood, one of the most important financial moves you can make is securing a stable residence. Whether you own a home or rent a house or apartment, it is important to be well-established in your residence before becoming a parent. Bringing a newborn baby home from the hospital can be stressful for many new parents. Being established in your home allows you to plan ahead for your baby's arrival.

Have a Stable Income
Another highly important financial task that should be tackled prior to expanding your family is to ensure that you have a steady job and income. By having a steady job, you are ensuring that a regular cash flow is available to pay for expenses like rent and bills. A steady income also allows you to maximize the amount you are able to save for the future. By optimizing your savings, you are helping to safe-proof your future from financial uncertainty.

Pay Down Debt and Optimize Your Credit Score
A financially smart move to make before increasing your family size is to pay down your debt and optimize your credit score. It is wise to pay off your existing debt before taking on more expenses that come associated with raising a family. No one wants to be in debt. By paying down your debt and optimizing your credit score, you are helping to make sure that your financial future is a bright one.

SEE: Do You Understand Your Credit Score?

Secure Quality Health Insurance
Another matter of high priority that should be accomplished prior to considering parenthood is enrolling in a quality health insurance policy. To protect your finances against unexpected medical costs, finding a health insurance policy that offers a broad range of services is of the utmost importance. Additionally, with healthcare reform taking the country by storm, health insurance has now become a requirement as opposed to a luxury. Be prepared and enroll in a quality health insurance policy prior to jumping into parenthood.

Learn to Budget Effectively
Learning to budget effectively prior to entering parenthood is a matter of high concern. Many parents find that their finances become strained after having a new baby, and learning to budget effectively can be difficult if you've never adhered to a financial plan before. By budgeting effectively now, you can help to ensure that your family's financial future is strong. Start small, and begin to cut frivolous purchases out of your household budget. It may also be helpful to determine what expenses are necessary and what could be eliminated from your monthly budget. You'll soon be on track to spending less, saving more and preparing for a brighter financial picture.

The Bottom Line
Before you take the plunge head first into parenthood, consider taking these important financial steps first. Not only will it help your financial situation now, but your future financial state will benefit from your proactive measures. Some stability, financial planning and common sense can go a long way when you are planning for your future. When you are finally ready to make the plunge, you will find yourself in a much more financially secure state.

SEE: How To File Your Child's First Income Tax Return

Related Articles
  1. Budgeting

    5 Alternatives to Traditional Health Insurance

    Discover five of the most popular alternatives to traditional health insurance plans, alternatives that are increasingly popular as health insurance costs rise.
  2. Home & Auto

    Don't Be the Victim of Auto Loan Rip-Offs

    Subprime auto loans – and 60-day delinquencies – are up. These 4 signs of predatory auto loans can tip you off before you're caught in one.
  3. Insurance

    Beware the Sneaky Math of Universal Life Insurance

    Universal life insurance's cash value can be a cash cow – if there's any left. Read on to see if it'll work as an income source after you've retired.
  4. Retirement

    Shopping the New Retirement Products

    There are more options than ever for retirement portfolios these days. Choosing the right product comes down to your needs, time and management style.
  5. Credit & Loans

    5 Extreme Ways To Raise Your Credit Score

    Desperate to rebuild your credit score because you can’t obtain a loan with a decent interest rate? Here are some extreme options to try.
  6. Investing

    How To Make Sure Your Healthcare Costs Do Not Ruin Your Retirement

    The best proactive plan of action for a stable retirement is to understand medical costs, plan ahead, invest properly, and consider supplemental insurance.
  7. Investing

    7 Creative Ways to Save for an Early Retirement

    Take note of these out of the box steps you can take towards securing yourself an earlier, more comfortable retirement.
  8. Personal Finance

    The Top 5 Personal Finance Experts to Follow in 2016

    Here is a look at five money and investing experts who can help you reach your financial goals for 2016.
  9. Retirement

    Birch Box Review: Is It Worth It?

    Learn more about the convenience of the subscription beauty box industry, and discover why the Birchbox company in particular has become so popular.
  10. Insurance

    Getting Your (Insurance) House in Order

    From starting a family to retirement, insurance can play a role in taking care of financial needs. This piece looks at some of the choices you can make.
RELATED FAQS
  1. Does dental insurance cover implants?

    Dental implants have become a widely used procedure in dentistry. Despite their popularity, however, they tend to not be ... Read Full Answer >>
  2. Does dental insurance cover dentures?

    Most full dental insurance policies include some restorative coverage, usually meaning that up to 50% of the cost of dentures ... Read Full Answer >>
  3. Can CareCredit be used for family members?

    CareCredit has become a widely used option when it comes to paying for medical procedures, primarily procedures not typically ... Read Full Answer >>
  4. Can a Flexible Spending Account (FSA) be used for dental?

    Flexible Spending Accounts (FSAs) can be used to pay for dental expenses including deductibles and co-payments with pretax ... Read Full Answer >>
  5. Does dental insurance cover braces?

    Most regular dental plans cover little to none of the costs of braces. The primary focus of regular dental plans is prevention ... Read Full Answer >>
  6. Does dental insurance cover crowns?

    Dental insurance coverage may vary according to the type of plan and the level of benefits that you have elected. Most dental ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center