First comes love, then comes marriage, then comes baby in a baby carriage? No matter the path you took to get here, if you're expecting a little bundle of joy or planning to adopt a child, now is the time to start planning ahead. Perhaps it's been something weighing on the back of your mind, and you just haven't gotten around to it, or maybe you hadn't even considered the financial "to do" list that comes with a new baby, but the fact is, adding a new family member comes with new financial obligations.
While you may not get to choose which college your child will attend or which career path they will take, there are steps you can take to lay a foundation of financial success for your children. Here are three specific steps you can take to better prepare for your growing family.
In expanding your family, you also may feel the need to expand your home. If you're renting or your first home purchase was a two-bedroom starter home, you may start to weigh the decision of whether to build the spare bedroom into a nursery or purchase a new home altogether. With children on the way, you also may wish to consider purchasing a home in a well-regarded school district.Upgrading from a starter home to a growing home or a growing home to a forever home is exciting and whole new undertaking. If you’ve been in your home long enough, you’ve likely established enough equity to make a fair down payment on your new home while keeping your monthly mortgage in a comfortable range.
Upgrading from a starter home to a growing home or a growing home to a forever home is exciting and whole new undertaking. If you’ve been in your home long enough, you may have established enough equity to make a fair down payment on your new home while keeping your monthly mortgage in a comfortable range.
2. College Savings Plan
It’s difficult to predict whether your unborn child will attend college, but it will be even harder financially if you don’t develop a plan with the possibility in mind. Even if your child doesn’t attend college, a savings plan could help pay for trade school or other ventures.
According to collegeboard.org, the average tuition and fees for full-time students in 2016-2017 was:
|Type of college or university||Cost per year|
|Four-year public college/university in state||$9,650|
|Four-year public college/university out of state||$24,930|
|Four-year private college/university||$33,480|
|Two-year public college||$3,520|
If your child doesn’t receive a scholarship, you could be responsible for 100% of the costs, not to mention you may have to factor in the cost of room and board if your child attends college out of town. Luckily, you have options to help, such as a 529 college savings plan.
3. Life Insurance
It is extremely important, if not more important than ever, to consider life insurance with a child/children in the picture. You now not only have you and your spouse to think about, you have to think about your future dependents. It might be tempting to cut back the amount of insurance you invest in yourself, with additional baby expenses rolling in, but it’s critical to include the security of insurance for your children in your estate plan. If you were to die without providing insurance to cover the loss of your income, how would your family be affected?
With a growing family, it’s inevitable that your financial goals and priorities will soon change. There are many responsibilities to consider beyond diapers and feedings. Even for the most organized parents, there's no way to know what the future may bring, but planning ahead will surely take away some of the headaches. When you're ready to craft a plan that will protect your finances as your family grows, make sure to contact a financial advisor who can understand your specific needs and will help you outline a financial roadmap to guide you in reaching your financial goals.
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