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Get Ready for Baby!

6 Financial Tips for Parents

By Joe Cooke, CPA, MT, JD

If you are pregnant, you've probably started to think differently about your finances. How much will it cost to raise a child? Can I stay home, or will I have to keep working? What about sports, proms, college, weddings and grandkids?

Here are 6 issues you can start thinking about now that can help you financially as you travel down the marvelous road of raising children.

Although money will not replace a lost parent or spouse, every parent should be insured for the sake of the surviving dependents. Contact a reputable insurance agent for help with determining the correct amount and type of life insurance and the kind of coverage, beneficiaries and contingent beneficiaries available.

There are two basic kinds of life insurance: term life and whole life. Both are similar to your auto policy in that if you don't pay the premium, the coverage expires.

Term life policies are only good for a certain term, such as 10 years. Whole life policies never expire (unless you stop paying the premium). The difference may seem subtle, but it is important. A term policy is fairly cheap for a 20-year-old non-smoker, but when it expires, the insured is 10 years older and has to apply for a new policy. At some point in a person's life, term insurance can be prohibitively expensive or even unavailable.

Whole life policies are best obtained when the insured is relatively young. The premiums can be affordable, and there are variations of whole life, such as universal life, that build up a cash value as premiums are invested. Some policies allow cash values to be borrowed against or perhaps cashed out before death, and sometimes the cash value and investment earnings can even be used to offset the premium payments.

When it comes to debt, get out and stay out. Pay off all consumer debt as quickly as possible, and try to eliminate any debt that is not secured by income-producing property.

Kids crave love and attention more than toys and doodads. The more debt you have, the more you will work and worry and the less time and attention you will have for your children.

Want to see more?

• Improve Your Financial Situation: 10 Steps to Make a Difference
• Money Management Shortcuts: 5 Steps to Help Busy Parents Stay on Top of
• A Balancing Act: Money Management Tips for One-income Families
• 10 Quick Money-Saving Tips: Basic Ideas to Make a Dent in Anyone's Budget
• Talk about it!

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