Family Life Planning: Preparing for Your Children’s Futures

There’s a lot to plan for when you have a baby on the way, from designing the nursery to scheduling diaper duty, but the questions you need to ask when you’re preparing for a life with children go far beyond a baby’s immediate needs. To make sure you can provide the best for your children, factor these considerations into your life plan.

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The Early Years

Before you have a child, you need to decide whether you’ll pay for professional childcare or opt to have a stay-at-home parent. Childcare can be expensive — infant care ranges from $402 per month in the cheapest state to $1,866 per month in Washington, D.C., and the cost burden for families with multiple children is even greater. For many families, having the low-earner parent leave the workforce may be the most financially sound option.

Once your children are old enough for school, you’ll be faced with another life planning decision: public school or private school? While the vast majority of parents choose public school, your child may have special needs or interests that make private schooling a better choice. However, private school tuition can easily rival college tuition, so you’ll need to have a plan to pay for this expense.

Saving for College

College tuition costs are rising 3.5 percent every year with no signs of slowing. And when the yearly cost of attending college is already higher than many salaries, starting college savings early is more important than ever. Thankfully, there are saving plans that let you make the most of every dollar you set aside. Saving starts with being frugal and not irresponsible with your money. Don’t spend too much on frivolous purchases, gambling, etc.

A 529 College Savings Plan lets you contribute after-tax dollars to a savings account that grows along with the markets. Funds withdrawn for qualified education expenses don’t have their earnings taxed, and you can transfer the account to another qualified beneficiary if a child doesn’t attend college or doesn’t use the entire fund.

A 529 plan isn’t the only way to save for college. Stashing college savings in a Roth IRA lets you withdraw penalty-free for qualified education expenses. Coverdell Education Savings Accounts are more flexible than 529 plans, but they’re subject to contribution and income limits. And you can always sock away money in a regular savings account, but you won’t enjoy the higher interest rate of a dedicated savings plan.

Support in Adulthood

Adult children are increasingly staying at home longer and turning to their parents for financial support, so you may want to factor the needs of adult children into your life plan so you don’t end up throwing other goals off course.

You should also decide if you’ll help pay for weddings or set aside money for future grandchildren. If so, you’ll want to start a dedicated savings account for this purpose so you don’t end up dipping into your retirement fund.

Protecting Your Family

Life insurance is never more important than when you have children. If you die from an unexpected illness or accident, life insurance will help pay for medical and funeral expenses and provide financial support for your family.

You may also want to consider purchasing disability insurance to protect your family if you become sick or disabled. Disability insurance pays a portion of your salary while you’re unable to work. The amount and length of time that disability insurance pays out will depend on the particular policy you purchase.

Even if you already have children, it’s never too late to start life planning. When you create financial goals for your family, you can be confident that you’re providing the best life possible for both you and your children. To get started with life planning, talk to a financial life planner to assess your goals and create a strategy for how you’ll meet them.


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