Good News October 2017 Broward

GoodNewsFL.org 25 october 2017 FINANCE If you’ve just had a new baby, your life is filled with more joy (but less sleep). You’re proba- bly already aware of the time and effort you must invest in raising your child, but you may not have thought as much about another aspect — the fi- nancial one. Consider this: The average cost of raising a child to age 17 is now $222,360, according to a U.S. Department of Agricul- ture report on how much mid- dle-income, two-parent families spend on their off- spring. And this is the amount you might spend before your son or daughter heads to col- lege. Clearly, you need to start making the financial moves necessary to take your child from diapers to a degree. Here are some suggestions for doing just that: Purchase sufficient life insurance. When it was just you and your spouse, it was a good idea for you to have life insur- ance — but now that you have a child, it’s an absolute neces- sity. If you have any doubts about the value of life insur- ance, just look again at that $222,360 figure above, and then tack on the costs of four years of college. If you or your spouse were to die unexpect- edly, would the survivor earn enough to raise and educate your child? In this day and age, that’s not likely — so make sure you have adequate life in- surance in place. Prepare a will. Obviously, you hope to enjoy a long life — one in which you see your child grow to adult- hood. But none of us can pre- dict the future, so it’s essential that you draw up a will to pro- vide for the care of your child, both financially and physically. When you create a will, you can name a guardian to step in and take care of your child, if necessary, and you can make sure your child receives your fi- nancial assets. However, many people go beyond writ- ing a will and establish a living trust, which gives them more control over how and when they want their assets distrib- uted. Your legal advisor can help you prepare a will and de- termine if a living trust is appro- priate for your needs. Maintain adequate cash. To help pay for all those ex- penses related to child rearing, keep enough cash on hand. By having enough resources avail- able in liquid accounts, you can avoid having to dip into your long-term investments to pay for short-term needs. Save early and often for college. It’s never too soon to start saving for the high costs of higher education. A529 plan is a tax-advantaged vehicle and may be a great option for your college savings. Contributions to a 529 plan are made with after-tax dollars, and have the opportunity to grow tax-free. Withdrawals used for qualified higher education expenses are also tax free. Furthermore, your 529 plan contributions may be eligible for a state tax deduction or credit depending on the plan and state. Stay balanced. As we’ve seen, it takes a lot of money to raise a child. But even as you’re meeting these expenses, think about your own future, particularly your retirement. Strive to strike a balance between the money you spend on your child and the amount you invest in your 401(k), IRA and other retire- ment-savings vehicles. You can’t put a price-tag on your child’s future, but when it comes to taking care of that child, you’ll want to know the costs involved — and be pre- pared for them. This article was written by Ed- ward Jones for use by your local Edward Jones Financial Advisor. Sponsored by William J. Holland at 954-768-0703. Edward Jones, its employees and financial advi- sors cannot provide tax or legal advice. Please consult your tax or legal professional regarding your particular situation. Smart Financial Moves for New Parents Special To Good News