As any new parent knows, having a child is a significant responsibility. Not only is there a large amount of preparation involved, but also having a child is a significant responsibility. In fact, according to a recent article in the Boston Globe, raising a child from birth to 18 years of age will cost a couple $250,000 on average. But the article also discusses several points and has a few suggestions for saving for your child and yourself. After all, once your child or children have left for college at 18, you want to have enough for retirement in a few decades and to also keep your children in school.
The Globe article follows a couple trying to find a better strategy for financial planning. Naturally, when it comes to the new child, they’re prepared with hand-me-downs for the crib, car seat, and clothing, but these are only the basics and, over time, a child will need more – including college. The parents also have their own financial needs, as well, such as life insurance, retirement, and putting money away for a larger home. The couple spoke with a financial advisor, who offered such suggestions as:
• Save a few hundred dollars toward each of these goals every month. Over time, enough will accumulate for use in the future.
• When putting away money, count for inflation. While a college education at a private university may be $35,000, the price will inevitably be higher in 18 years. Additionally, while inflation brings prices up, it doesn’t bring up the money in your bank account.
• Calculate how much you’ll need each month for all of these needs, including long and short term financial goals.
• If you’re looking for an alternative to only putting aside money for college, consider starting a 529 savings plan.
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