John Hancock

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When my husband and I had our first son, we had a vague notion that children were expensive. After the first year of diapers, bottles, baby food, and a continual need for new clothes in larger sizes, we knew that children were expensive. A few years and two more children later, the more difficult lesson we’re still learning is that the price we pay to take care of our children doesn’t go down as they grow. It goes up.

Now our boys are 13, 10 and seven years old, and of course we can’t imagine our home without them. However, the truth is if they weren’t here, we’d probably have a less expensive home, we wouldn’t have financed a home addition to add a playroom, and we wouldn’t be talking about repaving the driveway to accommodate a basketball court. All of those things cost money, but for me, it’s about adding value to my family’s quality of life.

When couples begin having children, most aren’t thinking about the price tag—and rightly so. A child born into a middle-income American family will cost his or her parents approximately $233,610 through the age of 17, not including the cost of a college education, according to USDA figures. That may seem like a lot, and it is, but some careful financial planning can set your family up for a more secure future. Here are five things you can do to help you and your children reach long-term financial success:

1. Create and stick to a budget.

You’ll be able to set aside money for unexpected costs and set a positive financial example for your children as they grow. When your children watch you live on a budget, it will be much easier to teach them how to manage their own finances as they get older.

2. Start saving for your future child’s education.

You can open a 529(b) plan and encourage grandparents and others to make contributions in lieu of gifts. By starting early, your child’s education fund will have many years to grow. They offer tax-deferred growth, and any earnings can grow faster than a taxable account. A 529 college savings plan also entitles you to federal tax-free distributions for certain qualified expenses.

3. Focus on wellness.

Maybe you don’t worry about unhealthy habits now, but when you have children, it’s important to stay healthy in order to take good care of them and to model healthy behaviors. Science is increasingly demonstrating you can control how you age. Need a little exercise inspiration? Turn to your kids for tips on how to fit fitness into your daily routine.

4. Protect your child’s future.

Once you have children, you have to plan for how they’d be cared for should something happen to you. Make sure that you set up a will to choose legal guardians, and that those guardians can comfortably provide for your children. Obtaining life insurance and disability insurance are also important for providing peace of mind. Plus, the earlier you purchase life insurance, the more money you can save, as a policy costs more as you age.

5. Don’t neglect your own future.

Once your children are grown, you’ll still have your own life to live—and you likely hope to retire or work less one day. Many parents focus on only providing for their children during the child-rearing years, and may put their own retirement savings on the backburner. Once the children are (almost) grown and gone, parents then start stressing out about their own future. Rather than making your future financial security an afterthought, start early by taking advantage of your employer’s retirement savings plan or opening your own IRA or other retirement account. By starting early, you’ll be taking advantage of years of compound interest while ensuring that your children won’t have to care for you financially later in life. 

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