Starting a family is equal parts thrills and fright, hope and worry. In a perfect world, money would never be one of those concerns. However, starting a family is obviously much more than bringing a baby home from the hospital and requires deliberate planning to start on the right financial foot.
College Is Expensive
Although news to exactly no one, college is already expensive and continues to rise at a rate far outpacing normal inflation. Therefore, the simple notion of time can be one of your most formidable allies as you start to save for higher education expenses for your newborn. Once you have a Social Security number for your baby, he or she is eligible to become a beneficiary of a 529 savings plan to help you start saving for their education. Given the magic of compounding interest and exponential growth, the sooner you start, the better the odds of you reaching your target savings goals.
Don’t Short Change Yourself
In the excitement of starting a family, it’s too easy to let the best interests of you and your partner or spouse get lost in the shuffle. Therefore, take a similar approach to saving for college and start putting away money for your own retirement as soon as possible. Of course, with a finite number of dollars to go around, only put away what your budget allows for the time being to maintain sufficient savings as well. If you have a 401(k) through your employer – particularly if they offer an employer match – you can use a variety of investments to maximize how your retirement savings grows over the longer-term.
Finances are complicated enough without having diverging sets of strategies and goals. That said, there’s bound to be differences in opinion between you and your partner or spouse, especially if you’ve started combining finances. Before things become contentious and lead to even bigger problems, try to keep open lines of communication to quickly sort out the inevitable differences that will arise.
For additional guidance and sense of direction, seek financial advice from a professional through your financial institution to get a better handle on your mutual short and long-term financial goals. Starting a family should be a joyful and momentous occasion so minimizing financial issues at the beginning can pay significant dividends – both literally and figuratively – well into the future.
Jeremy Wallace is founder and chief investment officer at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Jeremy has 20 years of experience in the financial industry and is passionate about helping clients preserve and enhance their wealth so they can pursue their passions. Jeremy graduated from Emory University with a degree in international economics and a certificate in financial planning. Outside of the office, Jeremy spends most of his free time with his wife, Julie, and their three children, Isabel, Lincoln, and Reid. He is an avid Chicago Cubs baseball fan, and he enjoys golfing with his wife and traveling with his family. Learn more about Jeremy by connecting with him on LinkedIn.