Adopting a child is one of the biggest decisions you may ever make. It can also be a shockingly expensive decision that will have a huge effect on your future finances.

In some situations, you'll be paying the price of a four-year public college degree just to complete the adoption process.

Let's start by looking at those figures. The least expensive form of adoption comes from your local foster care system. Your cost could conceivably be zero since states often subsidize these programs to place these children. Meanwhile, agency and private domestic adoptions can range from $5,000 to $40,000 or more depending on agency and attorney fees, travel expenses, birth mother health and living expenses, state requirements and many other factors. International adoptions are typically the most expensive due to the cost of travel and the wide variety of fees and requirements imposed by the country handling the process.

All parenthood comes at a price. But with the help of a financial planner you can create not only a strategy to afford the adoption process, but a plan to save for the child's education and your retirement. Here's a way to start:

Create or Review Your Financial Plan

A financial plan is a written set of goals, strategies and a timeline for accomplishing those goals. For many individuals, it may be the first time they seriously consider their financial future in such black-and-white terms. But it starts with the basics – determining how much you really have in savings, debt, insurance and investments. Your planner can also help you understand how much the additional costs of adopting and raising a child will affect all those numbers. A financial plan is a living, breathing thing. It should be reviewed once a year.

Know Your Tax Advantages

Families adopting overseas can get some tax relief. Though the credit can't be reduced by the alternative minimum tax, qualifying expenses include paperwork costs, court costs, attorney fees and all travel expenses including meals and lodging. There are income limits, too, so you may want to consult with a tax advisor.  

Ask What Your Employer Can Do for You

If you're working at a family-friendly company, it's often considerably easier to apply for leaves of absence or work schedules that make more sense when you've got a young child at home. Some companies may offer to reimburse some portion of their workers' adoption expenses. If you know of a company in your field that provides these benefits, it might make sense to start looking for a job there well in advance of the start of the adoption process.

Get Rid of Your High-interest Debt

A major decision like adopting a child is a good reason to take a "clean slate" approach to debt. Before you can build a reserve fund, it's wisest to pay off your credit cards first.

Make Sure You Have a Will

If you die without a will, you won't have a clear path of guardianship for your child, nor will your assets be properly directed to support that child. Any good adoption attorney will insist that you develop and file a will as part of the adoption process.

Check Your Insurance Options

In today's health insurance environment, the addition of a child to a policy can bring tremendous additional cost – sometimes without the guarantee of the best coverage. Before you start the adoption process, check with your employer or your independent insurance provider to make sure you have the best coverage for what you can afford. Also look into medical savings accounts with your planner if you decide to take a high-deductible policy to keep premiums low.

Build Your Reserve Fund

When a baby, toddler or older child comes into the house, money flies out the door at a velocity most childless people have never seen. Children always cost money and sometimes unpredictably so, but it pays to build your savings before they arrive so you won't overuse your credit cards. Also, it's possible that a birth mother's health may take a turn during the pregnancy, so that's an expense that needs to be anticipated.


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