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There's no one right way to build a family, and for some dreaming of parenthood, having biological children isn't possible. A common solution is adoption, which comes with the added benefit of providing a stable home to a child in need.
There are numerous types of adoption, ranging from ultra affordable to extremely costly. If you're considering adoption, here's how much you can expect to spend and how to financially prepare.
How Much Does a Typical Adoption Cost?
Adoption is generally quite an expensive process, though costs vary considerably depending on the path you choose. The age of the child can also affect the price. These are the most common options and their associated expenses:
- Domestic adoption: This involves adopting a child within the United States through a private agency or an individual assisted by an attorney. According to the U.S. Children's Bureau, the total costs of private adoption generally range from $20,000 to $45,000. If you're using an agency, this may or may not include a home study, which evaluates your background, lifestyle and other factors, and typically costs between $1,500 and $4,000.
- International adoption: Adopting a child from a foreign country through an international agency typically costs between $20,000 and $50,000, according to the Children's Bureau. This is usually pricier than domestic adoption, the bureau explains, due to additional expenses such as foreign travel, immigration processing, foreign attorneys, translation fees, escort fees and so on.
- Adopting from foster care: The most affordable way to adopt is through the public child welfare system. To help find homes for children in foster care, state and federal governments offer adoption assistance programs and subsidies that make it free or low-cost—usually no more than $2,600 total, according to Family Equality Council. Babies are rarely available with this option, but if you're open to adopting an older child, this is by far the least expensive way to start or expand a family.
Some adoption-related fees are covered by agencies, while others aren't. For example, according to nonprofit agency Adoptions From The Heart, individuals working with pregnant women to adopt their baby are usually required to pay for birth and delivery expenses that aren't covered by insurance. Legal fees can also be hefty.
How to Budget for Adoption
If you're planning to adopt, particularly via the more expensive private route, make sure you have a plan for how to cover the costs.
You may be able to finance the expenses through a personal loan, or home equity loan or line of credit—but it's best to avoid debt when possible, especially since your expenses will instantly increase once you bring a child into your home. Here are other ways you can prepare financially for adoption:
- Create a goal. Determine the type of adoption you'll pursue, and start researching to compare options and costs. Once you narrow down a specific type of adoption or agency, you can get a better idea of how much you'll need to save up.
- Adjust your budget. Once you've estimated how much you'll need, take a close look at your budget and see where you can trim expenses each month, even temporarily. Then funnel that extra money into a savings account to build your adoption fund. It's even easier if you set up an automatic transfer from your checking to savings account. Don't forget to also consider the ongoing expenses you'll need to budget for as a parent.
- Consider cashing in investments. If you own non-retirement investments, such as stocks and mutual funds, selling them could be one way to source money for adoption. If you're concerned about tax implications or making the right moves, consult with an investment advisor or financial planner before taking action.
- Look to your loved ones. Before you turn to financing, consider asking family members to lend you or gift you money to help with adoption. Prospective adopting parents could also utilize crowdfunding platforms or host a fundraising event to get assistance from their community.
How to Save Money on Adoption
If the costs of adoption seem overwhelming, there are some ways to save money in the process:
- Find out if your employer offers assistance. Some employers provide financial assistance programs to those seeking adoption. Amounts offered vary, but certain employers are especially generous; for example, American Express currently reimburses employees for up to $35,000 for an adoption or surrogacy (and you can use this benefit twice).
- Consider a different type of adoption. If private adoption is too pricey, you may need to be flexible and consider the far more affordable option of going through the government. While some families may prefer adopting a newborn, adopting an older baby or child can also lower the financial cost (and make a young person's life significantly better).
- Utilize the Adoption Tax Credit. The IRS offers an adoption tax credit that can offset some of the costs. In 2020, the credit was up to $14,300 per adopted child. The IRS also allows some employer-provided adoption assistance to be excluded from taxable income.
- Look for an agency with sliding fees. Some adoption agencies offer sliding fee scales based on the family's financial situation. If money is tight, look for an agency that offers this rather than flat fees.
- Apply for grants or financial assistance. Some organizations offer grants that provide financial assistance for building a family. Criteria vary; some are limited to certain states, and others require demonstrated need. Some grants are geared toward specific demographics; for example, the Family Equality Council lists LGBTQ-friendly family-building grants (though some in the list are for assisted reproduction treatments such as in vitro fertilization). Agency New Beginnings has a list of financial assistance programs for those seeking to adopt internationally.
Consider Financing Carefully
If the costs of adoption are beyond what you can save for, you may turn to financing. For such a large expense, it's best to avoid credit cards due to their high interest rates and quick due dates. A better option is a personal loan, which could have a lower interest rate (depending on your credit), along with fixed monthly payments spread out over several years.