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Money prep the key to stress-free parent planning


IT COSTS parents an average of $245,340 to raise a child from birth to age 18. That figure, from the US agriculture department, is just one reason why prospective parents are advised to consider parallel financial planning for child-based expenses and retirement.
The key is to start doing it as early as possible – according to a December 2012 article in The New Republic, adults are starting families later than in previous generations. In short, savings needs for childcare, college and retirement seem on a tighter collision course than ever.
Prospective parents should first discuss the pros and cons of starting a family in terms of personal, lifestyle and career success. The question “Do we want kids?” should come before the “Can we afford kids?” investigation.
Once family goals are settled, it’s wise to evaluate where current finances stand. While many couples have a thorough money talk before they wed, it works for family planning, too. Prospective parents will benefit from complete financial transparency before pregnancy, adoption proceedings or fertility treatment.
Utilize qualified financial and tax advice to fit specific circumstances. Consult trusted family and friends for referrals to qualified financial-planning and tax experts. Also check current tax rules for how to handle and potentially deduct certain costs related to adoption or fertility treatments.
Research thoroughly and bookmark resources online. The IRS website continually updates its summary of tax issues for parents, which can guide overall planning. New authors and bloggers emerge daily on virtually every aspect of parenting; friends, relatives and colleagues can also provide resources.
For prospective parents who are employed, it is a good idea to evaluate benefits well ahead of a pregnancy, fertilization procedures or adoption. Depending on specific circumstances, employees should review their employer’s health and general benefits for routine and emergency medical coverage, medical-leave policy and extras such as child-care benefits. Couples should compare their individual coverage to determine whose employer has the better family coverage overall.
Start planning for childcare expenses as soon as possible. Full- or part-time childcare services for working parents can be surprisingly expensive and difficult to obtain depending on location. In 2015, the White House reported that the average cost of full-time care for an infant was about $10,000 a year, while a 2014 Boston Globe report noted state-by-state estimates that were significantly higher.
For peace of mind and affordability, it is advisable to tackle the childcare issue as early as possible. Prospective parents might also speak with a qualified tax adviser about whether it is more advantageous to claim the child and dependent care credit on their taxes or pay childcare expenses from a flexible spending account at work.
Loved ones can also lend financial assistance to a new family in a variety of ways. Affordable basics include general parenting advice, babysitting services and sharing coupons and hand-me-down clothing, toys and unneeded child-related equipment in good condition. For folks willing to lend financial support, such options might include a Coverdell education savings account, 529 college savings plan or a gift of cash or assets to the child, subject to IRS rules. Also, anyone can directly pay medical expenses in full for someone they do not claim as a dependent under certain circumstances. If friends or family members offer financial help, encourage them to evaluate their options with qualified financial and tax experts.
Finally, prospective parents should become dedicated bargain hunters and savers with an equal focus on handling childcare expenses and supporting retirement objectives. Both financial goals are equally important.
Bottom line: It pays to plan early for a family. Evaluate your finances, reach out to friends and current family members for advice and seek help from qualified experts if you need it.
Nathaniel Sillin directs Visa’s Practical Money Skills For Life financial education programs. Follow him on Twitter at His articles are intended to provide general information and should not be considered legal, tax or financial advice. Always consult a tax or financial adviser for information on how the law applies to your individual financial circumstances.

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