Welcome to Joint Accounts, a weekly advice column about money and relationships of all kinds. Have a question? Email jointaccounts@medium.com.


Dear Joint Accounts,
I want to have kids sometime in the next few years, and I’m starting to think about how I’d pay for doctor appointments, baby supplies, and fertility treatment, if necessary. But any money I’d put away for these things is money I’m not saving for down payment on a house (which may happen sooner than a kid) or putting in a retirement account. As I try to figure out how to balance these things, how should I approach saving for a “kid fund”?
— Future Parent

First of all, kudos to you for thinking about finances in terms of the future. Most of us live only in the present when it comes to money, which leads to unpleasant surprises down the road. But there may be two questions here: First, how do you save up for the cost of kids? And second, how do you balance your kid fund with your other savings goals, like retirement or buying a home?

Let’s start with question one. The Bump estimates that the cost of a new baby can be more than $30,000 in the first year. This estimate includes baby gear and nursery supplies — and you can find ways to save on these expenses, like buying secondhand — but it also includes more complex costs, like health insurance, childcare, and the income hit of unpaid family leave. You’re smart to anticipate the cost of not just raising children, but conceiving them in the first place. One round of IVF costs an average of $12,000, and that doesn’t include the medications that come with treatment.

Your expenses might be way more than this, or they might be less. But all of this is to say: The sooner you start this “kid fund,” the better. And while you’re at it, prepare for a bigger monthly budget, too. Aside from childcare, you’ll spend money on baby food, doctor visits, diapers, and so on. Do the math now and figure out how much more you’ll spend when there’s a baby in the picture. Then, if you can afford to do so, start saving the difference. This will help you get used to a bigger budget, and you’ll build your baby fund in the process. Here’s a good baby budget calculator to help you get started.

Deciding how much to save for a house is a little easier. Most money experts agree that you should save for a 20 percent down payment. That is, save 20 percent of the value of the home you’re looking to buy. So, if you think you’ll get a house for $400,000 in your area, your goal should be to save $80,000 in the next few years, or whenever you’re planning to buy. You probably need to save a bit more than that, though, because there are closing costs, repairs, maintenance, and other unexpected expenses that come with homeownership. Many people balk at this advice, saying it’s unrealistic, but the 20 percent rule exists to protect you from financial ruin. If a 20 percent down payment is unrealistic, you might want to think twice about buying a house. After all, you don’t want to buy your home and have nothing left in the bank, putting yourself in a vulnerable financial position.

As for question two: Assuming you already have an emergency fund and have paid off any high-interest debt, retirement should almost always be your next savings priority. (You can use a retirement calculator to figure out how much you should be saving to fund your retirement.) When you have other savings priorities, retirement can feel like an easy thing to skip, but don’t: Time is a key factor in long-term savings, so put at least something in your retirement account while you’re saving for other goals. At the very least, make sure you’re taking full advantage of any 401(k) match your employer offers. You might find you need to cut back on your retirement savings to pay for childcare expenses, but you don’t want to forgo it entirely if you can help it.

So, now let’s say you have an emergency fund, your high-interest debts are paid off, you’re putting a comfortable amount away for retirement, and your goal is between a house fund or a baby fund.

You can do both, but I think the baby fund should be your priority. Here’s why: If you don’t have enough saved for a baby, that can cause financial stress down the road — just ask most parents. On the other hand, if you don’t have enough saved to buy a home, that just means you’ll keep renting for a while. There’s less harm in that, and in some cases, renting even makes more financial sense in the long run.

Err on the side of making sure you’re financially prepared for having a child. That’s one less thing you’ll have to worry about when you actually do. Sure, buying a home will feel great whenever it happens. But how good would it feel to minimize the financial anxiety that comes with parenthood?