By DANA ERICKSON
Having children is one of life’s most exciting steps. First-time parents experience a joy like never before when their new little one enters the world. This excitement, however, comes with its own set of challenges – especially when it comes to the cost of raising your child.
The truth is, kids are expensive. Just how expensive depends on many factors: Will one parent stay home with your child or will you hire a daycare provider? Will your child attend public or private school? Do you need a larger home or car for your growing clan? According to the U.S. Department of Agriculture, raising a child costs an average of nearly $11,000 the first year and more than $220,000 for the first 18 years.
Whether you are expecting a child or your little one has already arrived, building a solid financial foundation for your growing family is important. So where do you start? Thrivent Financial for Lutherans, a not-for-profit financial services organization, offers these five "baby steps" to help prepare expecting and new parents.
Start early. During your pregnancy, take the time to determine your family’s immediate financial needs as well as your long-term goals.
Create a realistic budget. Determine the true cost of what you will need and weigh it against the new realities of your household income situation. This is particularly important if you plan on leaving the workforce for an extended period of time. Consult another new parent for a list of monthly baby expenses to get a clear picture of those costs.
Start and/or increase an emergency fund. The chances of unexpected expenses will become much greater when the little one comes on the scene.
Protection through proper insurance. Its time to face your own mortality and vulnerability. Protection is critical. Consult with a financial professional to insure your health, property, income and life through appropriate insurance. In addition, consider a juvenile life insurance policy when your child is born. Also, be sure to update the beneficiary designation on your own policies once the baby is born.
Save for college. Before you know it they will leave the nest, so start saving for junior’s college experience now. A financial professional can assist with the various investment tools available today for college savings. Furthermore, opening a savings account in the child’s name is a great starting point for depositing monetary gifts given to the child.
"For new parents, one of the biggest financial priorities we hear about is their desire to protect their family’s financial future," said Bruce Fear, vice president of protection products and solutions for Thrivent Financial. "The foundation of this protection starts with having the proper insurance in place in case of an unexpected event. This can provide some peace of mind to many parents."
Supporting a family is hard work. Having the knowledge and tools you need to help ensure your financial stability will make the journey less complicated and even more rewarding. After all, even parents need a security blanket.
For more information, go to www.thrivent.com/planning/life/having_baby.html or call 1-800-847-4836.
Dana Olson Erickson, ChFC, CASL, is a Financial Consultant with Thrivent Financial for Lutherans in Stillwater. She can be reached at 651-439-7091.