Is A $15K Monthly Income And An $86K Emergency Fund Enough To Have A Baby In New York? Suze Orman Weighs In

Bringing a child into the world is an exciting milestone, but it also comes with financial responsibilities. For Ashley, a New Yorker earning a combined $15,000 per month with her husband and holding an $86,000 emergency fund, the big question is: Are they financially secure enough to have a baby? 

Personal finance expert Suze Orman recently addressed this question on her "Women & Money" podcast.

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Breaking Down Ashley's Financial Situation

Ashley and her husband have a strong financial foundation. This includes: 

• A $15,000 monthly income after taxes
• An $86,000 emergency fund
• $138,000 in retirement investments
• Monthly expenses totaling $6,000, including mortgage, insurance, food, and transportation

Adding a baby into the mix will introduce significant costs to this breakdown. Ashley mentioned that daycare alone would cost them $3,500 per month. 

The True Cost of Having a Child

Orman pointed out that there will be several other expenses to consider when it comes to having a child. "What is not in this equation is the cost of a child today," she said. "Forget daycare. Forget that there are costs to having a child, and it comes out to be approximately $25,000 a year till about the age of 17 or 18."

She added that her estimate also doesn't include saving for college.

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On top of the $3,500 per month for childcare, Orman estimates an additional $2,000 per month for baby-related costs such as healthcare, clothing, food, and unexpected expenses. This brings Ashley's projected new monthly expenses to almost $12,000—leaving a $3,000 buffer between their income and expenses. 

While the numbers suggest Ashley and her husband could afford to have a child, Orman advises caution. Unexpected costs can arise, and financial stress should not overshadow the joy of having a baby.

Orman's Recommendation: The "Trial Run"

To ensure financial preparedness, Orman suggests Ashley and her husband test out life with a baby—financially speaking—before committing. She advised Ashley and her husband to set aside $6,000 per month into a high-yield money market account since that would be close to the estimated cost of having a child. 

"You put $6000 a month away for one year and see how it feels," Orman said. "Now you have to ask yourself the question: Was that easy for you to do?"

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This strategy is meant to help them gauge whether they can comfortably manage the expenses without sacrificing their current lifestyle. 

"Now, obviously your life’s going to change when you have a baby," Orman said. "You’re gonna experience love…more than you’ve ever experienced love in your life, so it’s going to be fabulous."

If Ashley and her husband can consistently save this amount for a year without stress, Orman's point is that they won't be in financial stress when it comes to having a baby. Plus, they will have built an additional $72,000 in savings, bringing their emergency fund to $158,000—enough to cover about a year's worth of expenses if needed.

Should Ashley and Her Husband Wait?

Orman acknowledged that there is no universal right or wrong answer. However, she suggests that if Ashley is feeling financial stress about having a baby, she might want to wait. Giving themselves another year or two to build up savings and ensure a strong financial cushion could provide peace of mind and eliminate unnecessary stress.

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