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How to start financial planning early
The average cost of raising a child to age 17 is almost $250,000 for a middle income family. Starting sooner rather than later is the best way to prepare.
HOUSTON - Any parent can tell you how expensive it is to raise a child, but early financial planning and some tax help can take the edge off.
The average cost of raising a child to age 17 is almost $250,000 for a middle-income family. Those are government numbers, and starting sooner rather than later is the best way to prepare.
Brittney and Brandon Williams welcomed their baby boy in the closing hours of 2019. Right now, the family's focus is just on getting through each day, dreaming of a good night's sleep, but their know the financial challenges that lay ahead.
"I think we're most overwhelmed by day care because, you know, we both work and I'm on maternity leave, right now. But when I go back, it's super-expensive," Brittney says.
That's just the beginning. Diapers, formula, clothes, school, activities, it can all get overwhelming.
Valerie Brooks from Jackson-Hewitt tax services says it's common for new parents to be challenged by new-baby finances. The good news for the Williams family is that their baby's 2019 birthday means they can take advantage of tax benefits immediately, including deductible day-care costs and a variety of credits.
"They can get a child-tax credit of $2,000 for a child under 17. Then we also have, for those who qualify, the 'earned income tax credit', and it can be up to $6,557," Brooks says.
Beyond that, parents may need to make some money changes. If an employer offers a 401k, flexible health and savings accounts, take advantage of them. Build emergency savings, as unexpected costs are part of the experience. Make sure there's enough life insurance to cover the added responsibility.
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