Expecting parents should follow these financial tips.
Few things compare with the excitement and worry that comes with having your first child. But sometimes lost amid shopping for a crib and a diaper genie is a frank discussion about how becoming a parent will change your financial life.
“New parents have a massive amount of things to consider, and sometimes it becomes so overwhelming that they tune things out,” says Michael Kay, a financial planner in Livingston, N.J.
Having a child is expensive: The average middle-class family will spend about $225,000 for food, shelter and other necessities over the first 17 years of a child’s life, according to a 2008 study by the U.S. Department of Agriculture. Families that earn more than $90,000 a year can expect to spend $366,000. If a couple plans to have more than one child, the cost per sibling drops slightly, thanks to re-use of items like car seats and clothing.
So how should new parents budget for their quarter-million-dollar bundle of joy? Kay suggests breaking down costs into two groups: life planning and risk planning.
Life planning consists of day-to-day issues, like how a child will affect each parent’s income, what type of maternity or paternity leave or other benefits the parents’ employers offer and whether the child will need daycare…
“Think about things like who would be responsible for the child if both of the parents are gone, and who will be the trustee if the child has a trust,” Kay says. He recommends that parents list second and third choices for each of these positions.
Article by David K. Randall, Original article here
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