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Supporting Your Growing Family

Starting a family can be one of the most rewarding things you ever do, but also one of the costliest. As you will likely find out even before your first child is born, food, clothing, education, childcare, and other expenses add up quickly. This is why it is important that you create a financial plan. Here are some steps that will help your family remain financially secure as they move toward their goals and dreams.

Start Saving for College

According to the Bureau of Labor Statistics, by the time a child born today goes to college, tuition will cost three to four times its current rate. While there is nothing you can do to stop this, there are ways that you can prepare.

• Set aside a little money every month—You can build substantial savings so that the high costs of tuition, books, housing, and other expenses will not hit your wallet so hard. Consider the example of putting away $50 a month beginning at your child’s birth until he or she turns 17. Assuming 7 percent interest, your monthly savings could yield as much as $20,000.

• Start looking into education loans—They may be a necessary option even though loans cost more than saving. You earn interest on savings and you owe interest on loans.

Be Prepared

Setting aside money can help you get past nearly anything life throws at you. Some savings methods have greater benefits than others do.

• A certificate of deposit, or CD, is money that you lend to a bank. The money you deposit earns interest, but you can only take it out after the amount of time you agree with the bank upon when you deposit.

• A money market account limits the amount of withdrawals you can make, but will also accumulate interest.

A Better Home

Purchasing a new home – or making improvements to your current home – has obvious benefits for a growing family. Beyond comfort, extra living space, and the all-important additional storage space, these moves can be wise investments.

• Buying a new, bigger home in a nicer area will not only benefit your family’s peace of mind. As your home’s value climbs, it will also turn out to be a wise investment from which you can greatly benefit years down the road.

• Taking out a home equity loan to expand and improve your own home has similar positive benefits. By making improvements to your home, you increase its value. By the time you are ready to sell, your home could be worth substantially more than its value was when you first bought it.

Don’t Forget Your Own Retirement

While it is important that you take care of your family’s needs, you must also keep your own future in mind. If you start setting aside money for retirement now, you can be financially stable without having to depend on a steady income.

Life Insurance

Life insurance policies can ensure financial security for your family in the event of your death. Taking out policies on your children can also help your family transition during monumental life changes.

• For yourself and your spouse—If you do not have life insurance as you start a family, it is a good idea to take out a policy. If you already have insurance, look at your policy to see if the proceeds would be enough for your family in the event of your death. If the policy is not adequate, it may be a good idea to revise it.

• For your children—Think about buying life insurance policies for your children. This way, when the time comes for your child to start college (or if any other large financial needs arise), you can borrow against the policy to help cover costs.

Disability Insurance

There is always a chance that you might be injured, on the job or otherwise, in a way that limits your ability to support your family. Disability insurance will help make up for income lost due to being off work. If you already have this type of insurance, look at your policy to see if it will satisfy the needs of your growing family in the event that you are unable to work.

Putting it all Together

The money you save by taking each of these steps can really add up. While having a family is often about enjoying the moments as they quickly pass, investing a little bit of time and money in the future can ensure happiness and security for years to come.

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