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How to Financially Prepare for Adoption

4 Money Lessons I Learned through the Process

Wondering how to financially prepare for adoption? We’ll cover everything you need to know.

Saving money is hard. And saving money for an adoption can be even more difficult given how emotionally charged the process is (and how expensive it can be!). The cost of adoption averages $50,000-$60,000 in the United States through a private agency, though adoptions costs vary wildly and cost much less through certain programs that vary by state.

On one hand you want to be wise with your money, but on the other hand you’re not going to let any amount of money stand between you and starting or growing your family. I totally get it. My wife, Christy, and I had the same thoughts during the three-year process of adopting our three boys, and we regularly swung back and forth between trying to borrow as little as possible and doing whatever it takes to bring our boys home. Here’s what we learned during the process of becoming adoptive parents.

Want to Adopt a Child? Do It With Eyes Wide Open

As early in the adoption process as possible, come face-to-face with where you’re at financially and with your financial goals. The adoption process can be emotionally taxing and level-setting your financial health will conserve mental and emotional energy.  

Some information to gather:

  • What is your take-home pay each month?
  • How much are you spending?
  • How much do you owe (and who you owe the money to)?
  • What are your assets (savings, retirement accounts, etc)?

In fact, your home study may require this information, but writing it down for yourself will give you a starting point for your financial planning in figuring out how you’re going to pay for the adoption costs.

I encourage you to let go of any feelings of shame that may arise during this process. It’s normal to feel like your financial situation is a complete dumpster fire. We did. But it didn’t mean we couldn’t adopt. In fact, coming face-to-face with our financial reality enabled a desire to create a plan to pay for the adoption costs.

Plus, imagine the control you’ll have once that plan is in place! You’ll make spending decisions that are aligned with the priority of growing your family. You can regularly save money for adoption costs. And you’ll always be aware of how much you have and how much more you’ll need. In this scenario, your money would be working for you, leaving you time to prep the new bedroom or search Facebook Marketplace for that new minivan you need (and may secretly want).  

Financially Prepare for Adoption: Cash is King

Every cost you can pay for with your own money will reduce the amount you need to borrow. Of course we’re going to say the best way to stash cash is by getting on a budget. That will help you prioritize the adoption costs and cut out everything else that doesn’t matter.

And there are also some other things you can do to increase your cash. Have a garage sale, sell stuff online, pick up a second or third part-time job. Allow your creativity to spark some ideas that work with your lifestyle! Keep in mind, the adoption process is a sprint. All the sacrifices you make now to save and stash cash won’t (nor should they) last forever.

One last thought on cash, as you share your adoption story with friends, family, and community, some of them may want to donate to help cover the costs. We were gifted personal checks—and I know this can also be done nowadays with an online fundraising platform.  

Apply for Adoption Grants

I was shocked at how many adoption grants are available. And the great part about grants—you don’t have to pay them back. That’s anywhere from hundreds to thousands of free dollars that go straight towards your adoption costs.

A quick online search is a great starting point, but make sure you ask your adoption agency and online adoption community about any grants you could apply for. I forget how many grants Christy and I applied for, but I know we were lucky enough to get one from Show Hope, Mary Beth and Steven Curtis Chapman’s organization. There were stipulations on how we could use the grant, but it still helped a ton!

Become Familiar with the Adoption Tax Credit

If you live in the United States you definitely need to familiarize yourself with the Adoption Tax Credit (ATC). The ATC can significantly help offset the out-of-pocket adoption expenses such as the home study, agency fees, and travel.

This definitely isn’t tax advice, so you’ll want to make sure you talk with a tax professional (most states have post-adoption services that can refer you to an adoption-competent tax professional). As I see it, there are two ways to utilize this credit. One, you budget for all of the adoption costs and then you’re free to do whatever you want with the money you receive back from the ATC. This is the safest way to handle the credit because no matter what happens you’re still covered. It’s also probably the most difficult because it requires you to pay for everything upfront with your own money.

The other approach is to temporarily overspend on adoption costs (i.e. go into debt) and then use the credit to pay off that debt. There’s a bit more risk with this option because you’re borrowing money and then going all-in on the adoption tax credit covering it. This is what Christy and I did, and I have to admit this path came with a lot of stress.

Near the end of our adoption process we were paying for most of the costs with money from a home equity line of credit. It made me anxious seeing that balance regularly grow and having to pay interest on it was salt in the wound. And then once our adoption was finalized, all we had was hope that we’d receive the adoption tax credit to cover the balance we owed the bank. Thankfully, the credit came through when we filed our taxes, and we were able to pay off the entire amount we borrowed to cover the adoption costs.

Give Yourself Grace During the Adoption Process

Looking back, we definitely had some stressful financial moments during the adoption process, but it was also the best we could do at the time. There’s no one right way to prepare financially for adoption and your process doesn’t have to look like anyone else’s. Be gracious with yourself, walk through the process with eyes wide open, and use the budget to help you save money. You’ve got this, friends, and congratulations on your growing family!

Adoption categories to add to your budget
Consider setting up a budget for these adoption-related expenses.

P.S. My wife, Christy, is a post-adoption coordinator. She wouldn’t want me to write a post about financially preparing for adoption without reminding adoptive families to stay connected, supported, and continue learning!

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