Top 5 Money Mistakes New Parents Make
Search the Internet for: “cost to raise a child in America,” and you’ll find some terrifying results – ranging from $150,000 to over $300,000. It’s enough to make one swear off procreating, which is why those who actually do want to continue the species often don’t dwell on the numbers.
There are many more ways to get money for college than to get money for retirement.
The good news is that the hard financial truths don’t have to be that hard. Here are five simple pitfalls to avoid:
Failure to plan.“Essentially, the baby comes and it’s ‘drop everything, let’s take care of the baby,’” says Financial Advisor, Robert Avey of SGC Financial. “Usually, we’ll get the call to see someone well after they’ve had the kid and they have nothing in place. Now they want to do all sorts of things for themselves and their kids, but they don’t have a plan, priorities, or resources.” The longer you wait to get things in place, the fewer options you will have.
Delaying saving for college. If you had a baby today and planned to send her to a four-year, public, in-state college, at a five percent inflation rate, the estimated cost would be $201,108, according to the College Board’s savings calculator.
Prioritizing college before retirement.“There are many more ways to get money for college than to get money for retirement,” warns Avey. Paying for your child’s education is a great gift, but not if the cost is dependency upon them in your golden years. “I’d rather see people save for retirement and, if they want to, to help their kids pay their student loans along the way.”