Starting a Family

Congratulations on the addition to your family! As a first step, make sure your finances are under control. Creating a plan now can make adjusting to new family-related expenses feel more manageable.

Take a moment to identify the goals and dreams that are most important to you and your family. Then consider:

• Is staying at home with kids an option, or will you need daycare? What kind of daycare—in-home, full-time, part-time?
• What are the tax implications of having children?
• Have you addressed insurance protection for your family?
• Are you aware of your options for opening college savings accounts?

From grocery bills to insurance premiums, your day-to-day expenses can increase with children—often in ways you wouldn't expect. Knowing what to watch for can help you outline a family budget to accommodate today's expenses and tomorrow's dreams. For example:

• Groceries. Diapers and formula alone can add $100 per month to your bill.
• Housing. You may find yourself looking for new options once your baby becomes more mobile.
• Transportation. You may need a larger, safer or more reliable vehicle.
• Clothing and household items. Expect to spend a great deal on baby essentials right away. After that, simply budget for a bit more per month than you're used to right now.
• Medical. You'll probably owe co-payments for each trip to the doctor. Health insurance premiums will likely increase as well.
• Child care. Estimate the cost of professional child care. Then calculate what you'd lose in annual income if one of you quit working to care for children. Compare these figures—you might be surprised.
• Education savings. You can make monthly deposits into a savings or money market account. You can also buy a prepaid tuition plan, purchase Series EE bonds or explore other investment options.
• Emergency savings. Set up an emergency fund for unexpected illness, job loss or other difficulties. A good emergency fund should contain roughly three to six months worth of living expenses.
• Retirement savings. With all these new expenses, it can be tempting to cut back on retirement savings. Just remember that securing your own future is especially important if you have children. You don't want to burden them with your future health care or housing costs. Saving at least 10% of your salary is recommended.

Once your family starts growing, your goals and priorities can change quickly. That's why your financial plan is always evolving. An Ameriprise financial advisor will check in regularly to help you make sure your plan is on track.