With the thrill and glow of new parenthood comes the pit in most of our stomachs. How on earth will we afford THIS? From daycare, to cribs, to college funds, this whole having a child thing gets expensive even before baby arrives on the scene. Enter: help from a financial planner.
Here to offer an incredibly sane perspective on the parental finance front is Kristin Michel Rodriguez, a working mom and a financial planner. Her advice on how to prioritize budgeting for so many competing interests is incredibly calming and helpful.
When I was expecting my first child (and then second) I wanted to have a plan to pay for the things they would need along the way. And teach them how to be good money managers themselves. Then I ran into the cost of daycare. Holy moly, that was a shock. Then I ran a college calculator and found out how much I had to save each month if I wanted to be able to send my daughter to Harvard in 18 years. If daycare was a stretch, saving that much for college on top of daycare was a non-starter. And what about all those other things we’d run into along the way? Like summer camps, sports fees, ballet classes, a musical instrument, buying another plane ticket (or two or more) for the vacation, etc.?!
Clearly, our budget wasn’t built for all these costs. We had to set some priorities. And we had to make a plan for how to manage things along the way. Taking good care of our kids’ needs on a daily basis was goal number one, especially with little babies. We did everything we could to assure great care in their infant years, when they couldn’t talk for themselves and we had to be at work. Still, we chose a daycare that was excellent but not the most expensive. We had other priorities also.
Thinking of the worst case scenario helped us keep our priorities straight when it came to deciding how to spend money on our little angels and ourselves. Bad care for infants is not an option. But what if they didn’t get to go to the ballet class for 2 year olds? They would survive.
Then there is college. Whatever happened to Harvard? Well, let’s bring out the worst case scenario. What happens if she gets in to a good college, we can’t pay for it, and she gets no financial aid? She can get loans. Ok, that’s not so worst case. Hopefully we have taught her some good money management skills. And we help her set up a plan to pay down the loans over 10 years so she can move on with her life.
What about us, the parents? We saw pretty early on while paying for daycare that if we didn’t have a strong ship, we couldn’t do a good job raising these kids. We needed to take care of our own finances. Spend some time and money on ourselves. And plan for our own futures. We wanted to teach our kids to be good money managers, and being good role models was really the first step. This meant saving for retirement had to be a consistent goal for us. Yes, even in those early days when we had to stretch to pay for infant care. How does the worst case scenario look for that one? If we don’t save enough for retirement, there aren’t any loans we can take out. And we’ll be moving in with those same kids in our old age.
The best gift we can give our kids in adulthood is to not be dependent on them. And, if we’re financially secure, we’ll still be providing a great role model for them.
As you plan for a great new addition to your life, here’s my checklist for financial planning:
- Plan for costs to go up, especially in the infant stage.
- Keep taking care of yourselves. Do NOT stop saving for retirement.
- For college savings, use tax advantaged plans where it makes sense (e.g., 529, Coverdale.) (A helpful website to compare college savings plans is http://www.collegesavings.org/). Let grandparents and other adults contribute at birthdays and holidays, if they want to. If you couldn’t save when they were infants but want to later, start when they go to kindergarten and your child care bills go down.
- Because we get very emotionally tied to the well-being of our kids, try to use the “worst case scenario” concept when you’re having trouble setting priorities. What is the worst that could happen, if she or he doesn’t do this thing?
- Consider seeing a financial advisor to plan for the big things like retirement and college, if you could use some third party advice and coaching.
Know that just like figuring out discipline and teaching the little ones how to sleep, we all learn along the way. Being open to this process and trying to be a good role model will take you a long way in accomplishing the financial side of raising great kids.
Kristin Michel Rodriguez – Financial Planner: With over 20 years of experience in financial services, Kristin brings a wealth of knowledge to her clients. Known for her ability to listen and her passion for finding solutions, Kristin relishes every opportunity to help clients chart pathways toward their financial future.
She works with 3 other advisors at Symphony Financial. Kristin is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker Dealer, Member FINRA/SIPC. Investment Advisory Services offered through Investment Advisor Representatives of Cambridge Investment Research Advisors, Inc., a Federally Registered Investment Adviser. Cambridge Investment Research, Inc. and Symphony Financial are not affiliated.
Kristin is a strong advocate for women and currently serves as Vice President of the Women Business Owners of Montgomery County. She and her husband are residents of Rockville, Maryland and have two children who keep them busy in their free time.
Need more help as you become a working parent and head back to work after maternity leave? Join the next session of Mindful Return.