Having a baby changes your outlook on a lot of things: Priorities shift. Empathy expands. Sleep is an afterthought. And money anxieties get a lot more real. With the average cost to raise a child hovering around $233,000, it’s no wonder 73 percent of American parents worry about how they’ll send their kids to college—the most often cited economic concern of any demographic. The good news? There are definite steps you can take right now to shore up your family’s finances and lay the groundwork for a secure future. Start making these changes now, and you’ll rest easier at night (3 a.m. feedings notwithstanding).
1. Bulk Up on Life Insurance
Even if you have a policy through your employer, consider adding coverage that’s not tied to how long you stay at your job. For most families, term life insurance, which pays out if you die within a certain preset period, such as 20 years, is sufficient—and it’s inexpensive to boot. “Term insurance allows you to create a safety net for when you’re raising your children, and it’s not something you’ll need after they’re grown,” says Bre Romeo, a wealth management adviser for Fifth Third Bank. To determine the right amount of coverage to buy, think about how much of your income will need to be replaced and for how long. “You’ll also want to look at future expenses, like paying for college, as well as services you’d still need to provide for, like day care,” Romeo says.
2. Start Saving for College
If you haven’t heard of 529 plans, begin familiarizing yourself with them now. These state-sponsored investment plans allow families to get a jump-start on saving for college; they grow tax-free and can be withdrawn for expenses like tuition, room and board, and textbooks. “It’s a simple way to save for college, and many plans let you enroll with automatic deposits to the account so that you can ‘set it and forget it,’” Romeo says….