Any life change can be hard on a family budget, even if it is a happy event like the birth of a child. In fact, members of MMI’s Advice Team regularly receive questions about family and finances. In case you have similar questions, I wanted to share few frequently asked questions and answers.
Dear Advice Team: We recently adopted a son. We are all doing very well, but my concern is that at the end of every month we are broke! I am just buying things for our son. My husband doesn’t seem to understand how much a little baby can cost. Help! -Julie, Colorado
Julie: The not-so-good news is that you can plan on spending many thousands of dollars each year to raise your child until they reach age 18; and this doesn’t include college. If the amount seems overwhelming, you take comfort in the fact that many new parents worry about money. However, most adjust quickly and find that it is definitely worth every penny! Developing short-term and long-term goals can help you to stay focused. Make sure that your will and insurance policies are updated to meet the needs of your new family. Finally, keep the lines of communication open. Communication can be the key to a financially successful family life.
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Dear Advice Team: We just had our third daughter. On top of college costs, the idea of paying for three weddings is totally overwhelming. What is the best way to go about preparing for these upcoming costs? -Jeri, Arizona
Jeri: Cars, college, and weddings are just a few of the high-ticket items you may fund in the future. Fortunately, time is on your side. If you started saving $200 per month now in a money market account (5%), by the time your youngest child is age 18; you will have $69,840 and could avoid borrowing. Also, it is important to realize that having girls does not necessarily mean that have to shoulder the financial burden of their weddings. Today’s rules are not so hard and fast.
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Dear Advice Team: We are pregnant with our first child. My wife and I enjoy nice things. I worry that our budget will not accommodate our lifestyle and the baby’s expenses. Do you have a sample budget we can use? -Sean, North Carolina
Sean: The costs of raising a child can vary greatly based on the choices you make so this is not a case where one budget fits all. Keep in mind that becoming parents usually means changes in the lifestyles of both parents. If you think about it, people who don’t have children waste a lot of money filling time and avoiding boredom. Rest assured: you’ll have no problem filling your schedules once the baby arrives.