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Financial Impact of Adoption

The Financial Impact of Adoptive Parenthood

The following article, adapted from the author’s book Launching a Baby’s Adoption, and then included in new form in her book Adopting: Sound Choices, Strong Families  first appeared in an issue of Adoptive Families magazine. Those reading it as a printout will find it on the internet at

As the moderator of information bulletin boards for those exploring adoption for both INCIID (Exploring Adoption and Adoption Waiting Room)and, (Infertility, Pre-Adoption and Post-Adoption) a question I was frequently asked by infertile people is

 “We’re in debt after treatment! How can we possibly afford to adopt?”

So I offer here some resource gems that can help to answer that question…
The National Endowment for Financial Education worked with several organizations within the adoption community to develop a booklet on affording an adoption. The title is How to Make Adoption an Affordable Option, and its also available in its entirety on line. This is a wonderful place to start!
Additionally, international adoption facilitator Angie Taake has developed a very practical page called Creative Ways to Finance an Adoption which is also worth a look.
Additionally, the Casey National Center for Family Support (CNC) is making available a Federal tax benefits booklet that highlights deductions, exemptions, and tax credits of particular interest to foster and adoptive families and kinship caregivers. Copies can be reproduced from the CNC website.
Another important resource offering information you can share with your employer as well as techniques for making the approach is the Dave Thomas Foundation for Adoption.
Of course, consumers also need to know that a growing number of employers are adding adoption benefits to their list of employee perqs. In addition to the AdoptionQuest site, there are several places to learn about this:

But what about after the placement?…

For the infertile, family building is expensive business! After several years of supplementing patchy health insurance coverage fo rmedical treatments and then exploring options and finding loans or working extra hours needed to finance adoption, many adopters have not given much thought to the financial realities of parenting.

For those unprepared, money matters in raising a child contributes to the stress of adjusting to a new family configuration.In the fall of 1995 the U.S. Department of Agriculture’s Food, Nutrition and Consumer Service issued a report predicting that
in his first year alone a first child’s parents’ costs for housing, food, transportation, clothing, health care, child care and education, and miscellaneous (but excluding actual arrival costs–by birth or by adoption) would total $5100 for families with annual incomes under $32,800, $7070 for families with incomes between $32,800 and $55,500 and $10,510 for families withincomes over $55,500. Birthing him (but not including the costs of infertility treatments) might add from $4700 to $7800 to first year costs, and adoption costs might range from $2,000 to $20,000. Over eighteen years, the costs of raising that single child born in 1994 will range from $100,290 to $198,060. With college thrown in, plan to expend over $100,000 more. And remember, these are 1994 and 1995 estimates. Additional children don’t double the costs, but additions to the family certainly don’t slide in without financial impact.

While awaiting your child’s arrival, plan to spend time focusing on the family finances. Consider this “nesting behavior!” The following issues need advance-of-arrival attention:

  • A will. Many single people and childless couples have not drafted a will, but the arrival of a child complicates inheritance issues and necessitates planning for guardianship should parents die. Your adoption attorney may be able to help you draft a will or refer you to another attorney aware of potential adoption-related complications–and there are some in some states and provinces.
  • Insurance. Contact your health insurance provider far in advance of Baby’s arrival in order to make the transition smoother. Only the state of Arizona decrees that adopting parents’ insurance must cover a birthmother’s prenatal and birth expenses, and even that law islimited to those employers who are not self-insured and whose insurers are based in the state. Federal law, however, doesmandate the coverage of your adopted child under the same conditions as if he had been born to you, however claims staff areoften poorly informed about this. You will find it less stressful to anticipate their confusion and educate them in advance of Baby’s arrival.Singles, while aware of a need for disability coverage, often have seen no prior need for life insurances. Childless, two income couples may have felt that disability and life insurance were unimportant. But parents need to plan for their family’s financial well-being should they become disabled or die, leaving diminished family income and/or urgent child care, health assistance, and homemaking needs over a child’s growing up years.
  • Housing. While stories of babies cradled in bureau drawers are the heart of family legends, babies quickly need space and “stuff.” Before Baby arrives give thought and begin to plan for your family’s future housing needs–living space, play space, safety, schooling, etc. A downtown condo may not work as well for a family with a toddler as it did for dual-career couples. Your transethnically adopted child must grow up in a neighborhood and school system where he will feel included and respected. Moving with a baby is much harder than moving only adults, and, if your child will have spent any time before arriving with you in interim care or in an orphanage setting, his need for consistency demands that you impose no unnecessary future moves upon him in his first year. Before Baby arrives, adopters should consider whether making a move will be necessary within the first two years of his arrival.
  • Transportation. Babies need car seats; car seats need their own seatbelts. Either parent must be able to safely transport Baby at a moment’s notice. That two-seater sports car may not be appropriate family transportation once Baby arrives, and two door cars can be particularly inconvenient when struggling to strap a little one safely inside.
  • Employers and income. While you wait, be sure to let your employers know that you are expecting. Explore issues such as available leave time, availability of a dependent care account (which lets you use pretax dollars to pay child care expenses), how to adjust your paycheck to reflect appropriate deductions. Does the employer provide for parenting leave which is not part of the medical benefits plan? (Federal law mandates family leave for employees of firms of over 50 employees.) If so, the leave must be available to parents by adoption as well as to parents by birth. If parenting leaves are not possible and another form of leave cannot be arranged, will you be able to take accumulated vacation time on short notice? Are there adoption reimbursement benefits? Increasingly, large corporations are adding this type of benefit, which is relatively inexpensive but public-relations-positive.
  • Setting up short and long term expense funds. In the short term new babies are so expensive that it makes sense to change the family budget during the year before your baby’s arrival to create an early-expenses savings fund to cover unanticipated medical and adoption expenses, extended parental leave or job changes, etc. Over the long term you would be wise to plan from the beginning of your child’s life with you to save small amounts steadily in anticipation of his post-high school educational needs. Can one parent stay home or work part time? Two parent families should explore the possibility of one being able to leave full time employment to become a full time parent. Not only is it in any child’s best psychological and physical interests to spend his first year or more in the full time care of his parent rather than by even the very best of nannies or child care providers, but for some families financial realities will determine that when expenses of a child (including his food and clothing and medical expenses as well as hundreds, and often thousands, of dollars in day care) are added to the clothing, food and transportation costs already there, one parent’s job actually costs the family money rather than adding to its income. Single adopters have fewer options, but some have found ways to accumulate extended vacation or leave time in advance, to work from home, or to budget for part time employment. How to manage loss of income? Save carefully during the year or two before your child arrives. Also explore moving to smaller or less prestigious quarters for a while, driving less expensive cars, and reducing recreation and entertainment expenses.
  • Day care. If you will be returning to work shortly after your child’s arrival, think about child care long before baby arrives. Choosing in-home care providers is a complicated process. Many infant care centers and family day care providers have long waiting lists. While it may be impossible for you to predict exactly when your child is “due,” some centers will be flexible about trying to provide a space for you if they know about your pending adoption.
  • Unanticipated Adoption Expenses. Some adoption-related expenses are difficult to predict accurately. A newborn’s illness or a birthmother’s complications may increase birth-related expenses. Foster care expenses may rise if birthparents need more time to be certain. Counseling sessions for your child’s birth parents are important and can’t be predicted in advance. The need to stay longer than anticipated in order to deal with local bureaucracies may increase travel expenses in international adoptions. Prospective parents may find that they money they have spent in anticipation of a specific adoption may be lost when a birthparent has a change of heart. While in limited instances “adoption insurance” can be purchased to help with some of these unforeseen problems, and home equity or credit card loans may provide a cushion, while you wait, you would be wise to sock away into a special account as much money as you can manage to save. Believe me, if you don’t use it on the adoption, you’ll find many opportunities to use such savings to your child’s benefit as he grows!

This article, adapted from Launching a Baby’s Adoption: Practical Strategies for Parents and Professionals (PerspectivesPress, 1997) appeared first as a “Growing Up Adopted: 0-2″ column in the July-August, 1996 issue of Adoptive Families. It also appears in a shorter form on the website of Please do not publish elsewhere in print or on the internet without the author’s permission. Copyright © Patricia Irwin JohnstonCare to comment? Send us an email at or write to us at
Perspectives Press: The Infertility and Adoption Publisher
PO Box 90318
Indianapolis, IN 46290-0318
Perhaps the most comprehensive set of resources on financial issues has been gathered by the National Adoption Center on their AdoptionQuest site. After you enter this site and click on “Financial Assistance” you will find a drop down menu of several important adoption finance-related articles on topics such as a list of employers who offer such benefits, loans and grants, accessing subsidies, tax credit info, and much more!

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