Smart ways for parents to plan for children’s expenses
Children are blessings, but they’re expensive, too. Diapers, bottles, baby food, clothing, cribs, and car seats are just the beginning of the items babies need. As they grow, their needs continue to get bigger—like braces or money for after-school activities. Once they reach age 17 or 18, many leave for college, and everyone is familiar with the extraordinary cost of college tuition.
These expenses you as a parent will experience throughout a child’s life mean it’s important to begin financial planning as soon as you learn you’re about to become a parent.
The Economic Times suggests “saving and investing should begin the moment you plan a baby, splitting it into two buckets—pre-delivery and post-delivery.” This involves planning for medical expenses as well as the transition to a single-income household if one parent plans to stay home after the baby’s birth.
Financially preparing for a baby
If you have children or are planning to become pregnant, here are some smart ways to plan for your children’s future.
1. Tackle your debt
If you have a new baby on the way, tackle your credit card debt. High-interest credit cards and loans take a big chunk out of your take-home pay. Whether it’s paying off the credit card with the lowest balance, paying down debt on the credit card with the highest interest rate or calling the credit card company to request a lower interest rate, make a plan to eliminate as much debt as possible before your bundle of joy arrives. Once you have the baby, along with the extra expenses they bring, it will be more difficult to dig yourself out of debt.
If you would like to like a lower interest rate on your credit card debt, consider transferring it to a debt consolidation loan from Greater Alliance Federal Credit Union.
2. Upgrade your life insurance policy
Financial planning for parents involves planning for the unexpected. After all, you want your family to be financially secure if something tragic occurs. For this reason, make sure you have a good life insurance policy. The amount of coverage you need will depend on your specific situation. Those who have a life insurance benefit from their employer may believe the coverage is enough. But according to WealthManagement.com, “that coverage may be more expensive and less customizable than what they could purchase on their own, especially if they are in good health.”
Greater Alliance Credit Union offers a whole life insurance policy through The Family Security Plan. Visit their site to learn more.
3. Establish an emergency fund
Most of us are familiar with the expression “saving for a rainy day.” Saving for a rainy day means having an emergency fund to keep you and your family financially afloat if a disaster occurs. In the real world, nothing is perfect. People get laid off, they may have to handle unexpected medical expenses or they may need to make major home repairs. An emergency fund provides you with a safety net so you can take care of those unexpected expenses without relying on unsecured loans or high-interest credit cards.
How do you build an emergency fund? Set aside a percentage of your take-home pay to deposit into a special savings account. You may not have a lot of money earmarked for emergencies funds, but that’s okay. Start small, even if you decide to reserve $10 each week to stash inside a piggy bank. When you’re financially preparing for a baby or already a parent, you need to take steps to save money for those “rainy days” that are a part of everyday life.
Greater Alliance Federal Credit Union offers a special “Don’t Touch” club savings account for rainy days, as well as Certificates of Deposit and a Coverdell Education Savings Account (ESA) to help you save for the future.
Financial planning for parents: Ask how we can help!
Kids don’t come cheap. From the moment the doctor places your newborn in your arms, your whole life changes. Children need food, clothing, shelter and a multitude of items that, when added up, come with a heavy price. All parents want the best for their children. They want to provide a comfortable life for them, keeping their children healthy and happy. If you’re a parent or planning to become one, don’t wait to make financial plans for your family. Taking care of your money enables you to create a brighter financial future for your loved ones so they can have the best start in life.