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Preparing for the Expenses of Parenthood

Parenthood is a fulfilling experience that requires careful planning and consideration.

5/5/2021 11:13:49 AM
According to Investopedia, middle-income parents may expect to spend more than $284,570 for food, shelter and other necessities to raise a child through age 18 – not counting the cost of a college education!
  
If you have a better grasp of the financial requirements and tasks associated with parenthood, you can be better prepared for anything that comes your way.
 
Baby Pacifier IconExpecting a new baby? Click here for some important financial to-dos and considerations prior to the baby’s birth and try our “Cost of Baby’s First Year” virtual coach.
 
Step 1: Establish an emergency fund.
Even if you have a great handle on your finances, unexpected challenges can come along with parenthood. Unplanned visits to the hospital, surprise child care costs or unpaid time off of work can all threaten to throw your budget completely off track.
 
To create an emergency fund, multiply your monthly take-home pay times six to find the amount you should ideally save.
 
It’s usually not practical or possible to create a fully funded emergency fund in one shot. Instead, plan to add to it on a regular basis, in an amount you can reasonably afford, until it reaches your goal value.  
Step 2: Adjust your family budget.
There are a lot of unknowns that come with raising children. For that reason, it’s absolutely vital to have a detailed budget to guide you.

Take a look at your current expenses to see where you need to make adjustments. You'll probably end up needing more than you expect, such as higher costs for groceries, clothing, health care and child care. Accordingly, you may decide that you need to spend less on dining out at restaurants and entertainment.
Trim Your Budget IconIf you need to cut back on spending, try our online “Trim your Budget” coach.

Step 3: Make sure you understand your health insurance.
Whether you have a newborn, toddler, or teen, kids get sick. When you’re anxious about your child’s health, the last thing you want to also be thinking about is your finances.
 
If you are on a plan through your employer, ask questions about what is covered and how to find a pediatrician within your network.
 
See if you have the option to set up a health savings account (HSA) or flexible savings account (FSA), which can help cover unexpected medical expenses.

If your employer doesn’t offer insurance, or if you’re self-employed, shop for a private plan that meets your needs or look into your options under the Affordable Care Act.
Heart Health IconLearn more about North Shore Bank’s Health Savings Account (HSA) here.

Step 4: Get a life insurance plan, or make updates to your current policy.
Having a life insurance policy ensures that your beneficiaries, including your children, are financially taken care of in the event of your death. Too often, life insurance is an overlooked part of personal finances.
 
Life insurance needs vary from person to person, depending on factors such as income, home ownership status, number of dependents and more.
 
Umbrella IconTo assess your life insurance needs, check out our guide and try our calculator.
Safeguarding the future is easier than ever with a life insurance policy from North Shore Investment Services1. Get an instant quote.
 
Step 5: Start a college fund.
 
Sending a child to college is expensive. While costs vary from school to school, here are some average figures for one year of tuition, room, board, books and more:
  • Private 4-Year University - $40,000
  • Public 4-Year University (In-State) - $20,000
  • Public 4-Year University (Out-of-State) - $32,000
 
While these numbers can be shocking, you don’t need to panic.
 
Start saving as early as possible, and take advantage of time to allow your money to grow. The easiest way to save is with an automatic savings plan. Whether you can plan to save $10, $50, or $100 a month, ask your financial institution to transfer that amount automatically each month.
 
With a Money Market or High-Yield Savings Account, you can earn higher rates of interest for maintaining a higher balance to reach your savings goals faster.
Graduation Cap IconWant to know how much you should ideally be saving? Try our “Saving for College” calculator.

Raising children is incredibly rewarding, but it also comes with important financial responsibilities.
 
Taking the steps outlined above will help alleviate your stress and set your family up for long-term success. And of course, if you have any financial questions along your parenthood journey, our team is here to help.
 
Interested in a North Shore Bank Savings Account?  
Browse more of our financial literacy resources by clicking here.
 
1Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with North Shore Bank or its related companies. Individuals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.

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