Taking the Long View: Financial Planning Tips for Parents

If you’re a new parent, it can be hard to hone in on long-term financial planning. Most new parents aren’t concerned with the long-term when changing diapers, getting up at 4 a.m. for feedings, or trying to fight through the effects of sleep deprivation at work. However, it’s important to remember that raising a child is expensive, and planning for the milestones you know are coming — and the expenses you can’t predict — just makes good sense. What’s important is to have a plan, to implement it early, and to stick with it. 


Young people often don’t spend much time concerned about insurance. Things like life insurance, health insurance, and disability aren’t on the radar when you’re in your 20s. Things change radically when you start a family, though. Your mindset changes from “me” to “my family” very quickly, and things like family health insurance suddenly become very important. If you’ve gotten by so far on a minimal health insurance plan, there’s a financial adjustment to upgrading and insuring a spouse and a child. Suddenly, more is coming out of your paycheck to pay for family health, and there are higher deductibles and copays to factor into your budget. 

Then there’s life insurance, which provides a financial safety net for your loved ones if something should happen to you, allowing them to remain in their home or have money for college tuition or a daughter’s wedding. Bear in mind the importance of understanding the types of policies, premiums and cash values available when seeking life insurance, and that selling a policy later in life can free up cash for medical expenses and other needs. 

Disability insurance adds a level of protection if you or your spouse is injured or becomes too ill to work for an extended period. Be sure that you have enough disability insurance to cover a house payment, debt, daycare, and incidental expenses. Bear in mind that some disability policies pay out benefits only if you’re unable to work at all.

Build Savings

Everyone needs to set aside money for emergencies. For young families, it’s an absolute must. With another mouth to feed and care for, an unexpected expense could place a tremendous strain on your finances and severely damage your financial situation. Most financial planning experts recommend setting aside enough to cover expenses for three to six months, which can be difficult for young couples adjusting to new financial responsibilities. Take advantage of opportunities to have a percentage of your salary automatically withdrawn and deposited into a savings account. Consider diversifying by spreading this money out into certificates of deposit, or money-market or interest-bearing checking accounts. 


College tuition is probably the single largest expense parents face in raising a child. It is projected that a four-year degree in five years will cost approximately $106,033, which places a premium on saving as early as possible. Considering the student loan debt that many college-age Americans incur, the wisdom of saving as much as possible becomes alarmingly clear. Student loan debt is America’s second-highest consumer debt category and is higher than both credit card and auto loan debt. Today, there are 44 million student loan borrowers owing a combined $1.5 trillion

Planning for an expensive and uncertain financial future is an important matter for parents. The high cost of raising a child and the need to prepare for things like a home loan, child daycare, and college tuition underscores the importance of planning for the future.

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