YOUR FUNDS
Having child calls for financial plan
REBECCA WARREN is a certified financial planner and certified senior adviser in Mesa. She can be reached at (480) 357-8380 or Rebecca@ WarrenFinancialServices.com.
Your parents might have mentioned at least a couple of times while you were growing up how wonderful and expensive you were. The bottom line? Bringing a child up is a tremendous financial responsibility, and it’s better to plan in advance than deal with a surprise down the line. The U.S. Department of Agriculture compiles an annual survey on what it costs to raise a child from birth through age 17. In 2007, in the lowest income group, expenses ranged from a total of $7,830 to $8,830 for a two-child, husband-wife household to between $15,980 and $17,500 for families in the highest income group. Once again, those are the latest annual figures — so if you held spending unrealistically static for the next 17 years, the cost of raising a child in the lowest income group would range from $133,110 to $150,110 adjusted for inflation. In the highest income group, that range would be between $271,660 and $297,500. Note that we haven’t begun to discuss college yet. Across the U.S., the average tuition and fees at fouryear private institutions in 2007-08 was $23,712, representing a 6.3 percent increase of more than $1,400 over 2006-07, according to the nonprofit organization College Board’s 2007-08 annual survey of colleges. At public four-year colleges, the average in-state tuition and fees averaged $6,185, a 6.6 percent increase. All parenthood comes at a price. But with the help of a financial planner you can create a strategy to afford kids from birth through college. Here are some key points in that process:
• Create or review your financial plan. Determine how much you really have in savings, debt, insurance and investments. Your financial planner can also help you understand the additional costs of raising a child.
• Get rid of your highinterest debt. A major decision like having a child is a good reason to take a “clean slate” approach to debt. It’s wisest to pay off your credit cards first.
• Make sure you have a will. If you die without a will, you won’t have a clear path of guardianship for your child, nor will your assets be properly directed to support that child.
• Check your insurance options. In today’s health insurance environment, the addition of a child to a policy can bring tremendous additional cost — sometimes without the guarantee of the best coverage. Check with your employer or your independent insurance provider to make sure you have the best coverage you can afford.
• Ask what your employer can do for you. If you’re working at a familyfriendly company, it’s often considerably easier to apply for leaves of absence or work schedules that make more sense when you’ve got a young child at home.
