7 money moves to make before adopting a child

Parent jumping on trampoline with two small children.

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Whether you become a parent by birth or by adoption, life is easier when your finances are in order.


Key points

  • Raising a child is expensive. The more you’re prepared for the extra expenses, the more time you’ll have to focus on your growing family.
  • Organizing your financial affairs includes making sure you have adequate health insurance coverage, enough life insurance, and a will in place to protect your child.

Bringing a new child home can be expensive, whether you’re paying for medical bills to give birth or adoption fees. If you are adopting a child from the foster care system, the fees are likely to be relatively low. If you are participating in a private adoption, you could be looking at costs ranging from $30,000 to $60,000.

If the cost of adoption runs into the tens of thousands, it’s critical to get your financial ducks in a row. This means making sure that you have the money to cover the costs, but can continue to invest for the future. It may seem overwhelming, but you don’t have to do it all at once. Pick one goal to complete before moving on to the next.

First of all

Before we go any further, however, United Way offers adoptive parents these tips for avoiding scams and keeping money in your bank account.

  • Before handing over money to a counselor who promises to find you a child, check their references carefully. Adoption facilitators are not well regulated and are illegal in many states.
  • Consider it a red flag if a birth mother asks you for money. While it is true that expectant mothers may need financial assistance, all financial transactions should be handled by an adoption attorney or agency. Simply put, you are emotionally involved and therefore easier to manipulate.
  • If you are working with a woman who is still early in her pregnancy, know that she may change her mind. The money paid may not lead you to adopt his child.
  • Participate in online forums for potential adoptive parents. According to United Way, members report ongoing scams.

Money moves to do

As you approach the day of welcoming a new child into your home, make sure your finances are in order. Here are seven steps that will serve your growing family well.

1. Review health insurance

Whether you have employer-sponsored health insurance or purchase your own coverage, read carefully to make sure you have everything you need. For example, if you pay a low premium, you probably have a high deductible. Consider whether it’s time to reduce your deductible now that a child will be covered.

Everything – from checkups to bumps and broken bones – requires you to pay out of pocket. Take a look at the maximum amount you’re expected to pay on your current policy and decide if that amount still works for you or if you need to change it. The lower your deductible and disbursements, the higher your premiums will be.

2. Create a new budget

One of the most shocking things about parenthood is how expensive children can be. You’ll need to update your monthly budget to include things like daycare, diapers, formula, clothes, and all the supplies a child needs.

3. Adjust your emergency fund

Take a look at your emergency fund. If you were to get sick or lose your job, how long would you be able to get by without income? Would you have enough money to take time off work if your child needed you at home?

4. Open a 529 account

Even if you’re adopting a newborn, that child might want to go to college one day. A 529 account can help you save while getting tax relief.

5. Purchase additional life insurance

Now that you’re going to have a child based on your income, make sure you have a life insurance policy large enough to cover their needs if you die before they reach adulthood. The good news about life insurance is that term life insurance policies are relatively inexpensive.

6. Update your will

If you have a will, it’s time to include your new child. If you don’t have a will, now is the time to have one written. Your will is a plan of what you want to happen after you die. In addition to indicating your heirs, a will also allows you to name who you wish to have your child cared for after your death.

7. Register

Chances are a lot of people will be thrilled that you’re becoming a parent. Harness that excitement by signing up for all those items you would typically have to pay for yourself. No matter the age of the child you adopt, let your caregivers help you stock the home with the things your child will need.

There are few more satisfying things in life than loving and molding a child. Preparing for the financial aspect of being a parent means having more time to focus on enjoying your family.

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