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Janice France-Pettit: Tips for growing a family

Posted: June 25, 2014 2:00 a.m.
Updated: June 25, 2014 2:00 a.m.
 

Starting or growing a family can be an exciting milestone in one’s life. But as most experienced parents will tell you, your priorities are likely to change, and along with these changes come new expenses and responsibilities,

including fiscal responsibilities.
Following are five financial tips to consider when starting or growing a family.

Consider the Costs

According to the United States Department of Agriculture’s most recent annual report that tracks child-related expenditures, a middle-income family with a child born in 2012 can expect to spend about $241,080 for food, shelter, and other necessities to raise a child to the age of 18.

This does not include the cost of a college education, or medical bills related to pregnancy and delivery.

If you plan to adopt, the costs widely vary depending on the type of adoption, according to the Independent Adoption Center (IAC), a non-profit organization that provides open adoption placement and counseling to birth and adoptive families.

Generally, you can expect it to cost up to $1,000 to adopt a child from a County Foster or adoption program.

Non-profit agencies often calculate their fees on a sliding scale based on your ability to pay, but fees still can run between $10,000 and $25,000 to cover background checks, legal fees, travel and medical expenses.

Private adoptions through an attorney can run from $20,000 upward.

The good news is there are grants and other forms of financial assistance available that may help with some of these costs. The IAC lists some of these resources on their website www.adoptionhelp.org/financial-aid.

Develop a Budget and Save

To help you get a grip on your changing finances, develop a budget that takes into consideration short-term and long-term budgetary needs.

Along with the obvious expenses of clothing, diapers, baby furniture and other gear, you’ll need to factor in the cost of pre- and post-natal healthcare and possibly childcare.

Look for ways to minimize expenses

Be sure to include savings for long-term goals. If you plan to pay for some or all of your child’s college education, begin exploring 529 College Savings Plans and other options that may offer tax advantages.

Review your insurance coverage

Be prepared for unexpected medical expenses by making sure you have adequate insurance, and savings to cover out-of-pocket expenses.

Take time to review your health care and employer benefits and policies and research how much you can expect to pay during your pregnancy, delivery, and once baby is home.

Opening a healthcare savings account is prudent and has tax advantages, but you should also at least have an emergency savings fund of around $1,000.

Consider purchasing a life insurance policy to replace lost income in the event of an untimely death.
Deciding whether to stay at home or return to the workplace after a maternity or paternity leave is a personal choice, as well as a financial one.

Childcare costs can be one of the most taxing on the budget, so research all your options early to have a clear financial snapshot.

Begin interviewing and visiting childcare providers well before the baby is due, and have a plan in place before you return to work.

Meet with your financial advisor
Meet with your financial advisor to discuss ways to offset the costs of a growing family.

Inquire about tax credits like the Dependent Care Tax Credit and pre-tax options, such as a flexible spending account, which allow you to set aside money from your paycheck to cover childcare and medical expenses.

If you are adopting a child, ask about adoption credits and other tax benefits.

Co-authored by Janice France-Pettit and Maria Bautista. France-Pettit is a senior vice president and regional manager for Union Bank.

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