New Family Financial Planning

Planning for your Growing Family's Financial Future in Spokane, WA

How to be Financially Prepared for a New Child in the Family

Along with the excitement and making room in your home and your life for your new addition, it's a good idea to prepare a household financial assessment. Starting before your child arrives will give you the chance to develop and follow good financial habits.  The sooner you begin, the easier it will be to enjoy one of life's most wonderful experiences.  The motto is “Well begun is half done.” 

But, well begun is not finished.  As you watch your child or grandchild go from crib to kindergarten and beyond, there may be steps you can take during his or her journey to adulthood that could help build on your household's financial plans.  A little education as they grow up may pay off.  The goal would be to instill a sound understanding of money, investments, and personal financial responsibility to help prepare them for adulthood.

Attend to details early

To get a good start financially, there are some things you can do before your new arrival while you have some free time on your hands.  Plan for lost income and the extra expenses that come with a new addition.  For example, check with your employer to know in advance how much maternity and family leave time is available so you can better prepare to afford your leave.  Talk with your bosses and HR about your plans. 

Now is the time to develop good savings and spending habits.  Learn to distinguish between needs and wants.  Review your existing debts. Prioritize and begin to pay them down on a disciplined schedule.  As you pay down debt you may be freeing up income for your child's needs and your own savings and retirement.  Don't forget to pay yourself first. 

Every dollar saved matters even if you don't feel you have that much to save.  Set up an automatic savings plan to make regular monthly contributions.  And keep saving and investing even when times are tough.  Treat savings as another bill that must be paid each month. Meet up with your financial advisor to discuss the opportunities of establishing a 529 college plan.  Statistically, the earlier you start the more your investment can grow.  There may be tax savings opportunities as well.

Finally, check your insurance coverage to make sure you have appropriate health, disability, and life insurance for yourself and others essential to your family's wellbeing.  Don't forget to add your new child as a beneficiary to your employee benefits and any insurance policies.  Update your estate plans and name guardianship. 

Pay it Forward

“They grow so fast!”  We all have heard or said these words many times.  Although you can't really freeze a youngster's precious moments in time, you can take steps to make sure that his or her journey to adulthood starts with a sound understanding of money, investments, and personal financial responsibility.  Consider these and other activities to help your child prepare for their future as adults.

  • Count on Counting Your Change
    • Smart shopping might begin with a hunt for bargains, but it should end with a review of your transactions. Encourage your kids to unload your purchases and compare price tags with the receipt looking for mistakes.  Let them hold on to any refunds.
  • Play “The Stock Market Game.”
    • Get online and go to the Stock Market Game website.  It is sponsored by the Securities Industry and Financial Markets Association (SIFMA).  It lets kids in grades 4 through 12 assemble and monitor a hypothetical $100,000 portfolio for 10 weeks.
  • Make a Matching Contribution
    • Want to motivate a child or grandchild to save?  Just offer to match a portion of each savings account deposit he or she makes.  And don't be afraid to set a few rules.  For example, matching contributions can't be spent on candy or pizza.
  • Take Stock of Household Products
    • If your child is old enough to understand the concept of stocks and publicly traded companies, go through the house together and identify items, such as computers, games, and favorite clothing.  Then look up the manufacturer's stock price and monitor its performance over time.

Good Choices Help Create Great Futures

Your life as you know it will never be the same.  Being prepared financially, with a commitment to a disciplined plan for saving to reach your family's goals will make all the difference to your future wellbeing.  By spending less, saving more, keeping your focus on your values for your family's independence, and sharing those values with your kids, you will not only work toward financial independence, but you will have a sense of preparedness.  You will be able to pursue the life you want for you and your loved ones.

Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

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