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Plan for your future family now

Whether you're a new parent or hope to be one soon, it pays to consider family finances today.

Young family works in the garden

Starting a family may be one of the happiest events in your life—and possibly the most expensive. According to the U.S. Department of Agriculture, a middle-income family with a child born in 2012 can expect to spend about $241,080 for food, shelter and other necessities over the first 17 years—and that doesn't include college costs. But you can ease the impact of expenses by getting serious about your family budget even before your baby arrives. Here are some key considerations:

Start saving.

"Most important is to have an emergency fund in place," says Robert Payne, senior financial services representative with the Principal Financial Group® in Greensboro, North Carolina. He suggests saving three to six months' worth of your take-home pay.

Get budget-wise.

Develop a family budget that takes into account current living expenses plus new-baby-related expenses. Besides ongoing costs—including health insurance, copays for doctors' visits, diapers, formula, food, clothing and day care—factor in onetime costs for outfitting the nursery and stocking up on baby gear. Avoid going overboard with these purchases.

Consider college.

It's never too early to start saving for college. Payne suggests learning about your state's college savings program, which may offer preferential tax treatment.

Remember retirement.

"You need to make sure you continue to fund your retirement—at least up to the plan's matching contribution," Payne says. Skimping on contributions to save for future college expenses can be detrimental to your retirement. Employer-sponsored retirement plan savings don't count against financial aid benefits.

Be smart about benefits.

Contact your corporate benefits department to determine which changes you are allowed to make after welcoming a new child into your family. You may want to enroll in benefits you previously skipped, such as long-term disability, or a flexible spending account to pay for day care.

Plan ahead.

Payne suggests meeting with a financial professional to help ensure you have adequate life insurance coverage, and consulting with your attorney to draw up a will. Although you may not want to think about worst-case scenarios during such a happy time, you can rest easier knowing your family is provided for if you aren't around.

Estimate expenses.

estimate child expenses Get an idea of how much it might cost to have a child with our "How much will it cost to raise a child?" calculator.


The subject matter in this communication is provided with the understanding that The Principal® is not rendering legal, accounting or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax or accounting obligations and requirements.

Insurance products and plan administrative services are provided by Principal Life Insurance Company. Securities are offered through Princor Financial Services Corporation, 1-800-547-7754, Member SIPC and/or independent broker dealers. Securities sold by a Princor® Registered Representative are offered through Princor. Princor and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392. Certain investment options may not be available in all states or U.S. commonwealths.

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Plan Ahead. Get Ahead.

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