You’re having a baby! And your first munchkin is anxiously awaiting the arrival of his new baby sister. You did everything you were supposed to do to get ready for baby: you kept your doctor’s appointments; took prenatal vitamins religiously; ate well; stayed away from cigarettes; put your feet up when you could; prayed.  And you kept your firstborn involved, talking about the little bun in the oven and how he’d get to be a big boy and help his little sister figure things out as she grows up.  The whole family is excited!  Mom came to town to help when the baby comes.  Any day now.  The baby’s room is filled with hand-me-down furniture from the first one and all the gifts of baby supplies and clothes that you received at the baby showers – one at the office and one with family and friends – for this one.  You know that what a child needs is a loving home with parents who provide for their needs, just like you had.  To that end, you and your partner are more than capable.  You both work, bringing in a combined $80- to $90,000 a year with overtime.  You own your home and have family and friends all around you.  There are good schools in your area.   You and your family believe you have done everything necessary to be ready for when the baby comes, just like the last time.  But even though you know from the first one that raising a child requires a sizable financial commitment, you never tried to budget for it.  The one thing you haven’t considered in getting ready for either child’s arrival is how to prepare for the long-term financial responsibility of raising them.

In a Huffington Post article posted 8/18/14, it was reported that raising a child born in 2013 until the age of 18 would cost about $300,000 when adjusted for inflation. Housing is the largest expense, followed by child care and education, then food. How often is it that parents sit down and formalize a financial plan in preparation for the years to come after the baby is born?  When the first one came to bless the world, did you and his father ever have a conversation about putting a plan together to protect the family’s financial future?  If so, did you take it a step further to commit to some objectives then follow through on implementing them, consistently?  Do you know how to go about these things?  Or are you comfortable just seeing how it goes?  Is there anything about the financial situation you grew up in that you would rather not repeat with your own children?

Housing is the largest expense related to raising a child.  None of us want to think about this, but there may come a time when we are called back home earlier than expected.  There are many children who have faced this reality, having to grow up with only one or neither parent because they passed away.  Would your beautiful new baby girl and her older brother be able to stay in their home if one income or more was no longer there?  At the end of those 18 years the children you raised through struggles and triumphs will be off to college or trade school.  Who will pay for it?  The time to figure this out and take action is now.  Eighteen years sounds like a lot more time than it will be.  And the more time you let go by before getting started on protecting your family’s future, the more (exponentially more) it will cost you when the time comes that the money will be needed.

Parents spend much time and energy first planning for the baby to arrive then doing all the things necessary to ensure the basic needs are in place to raise your children properly – food, clothing, shelter, education.  But while you’re building a family it is important to ensure that it is grounded on a  solid foundation.  That is, a financial game plan based on income protection and savings and investments for emergencies and education and even retirement.  I encourage you to capitalize on the advantage of time that is in your possession today.  It doesn’t have to be the overwhelming or painfully sacrificial experience you may be imagining.

Feel free to comment and share your own insights and knowledge!

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