New addition means new approach to financial planning

There are a lot of families currently in growth mode – the kind that comes with sleepless nights and diaper changes. A study from the U.S. Department of Agriculture indicates that it will take a typical family almost $235,000 to raise a child, so here are some important things to think about if a baby is on the way.

For the grandparents:

Lend a hand. Many parents, especially those stepping into the role for the first time, underestimate the amount of time and effort that goes into raising a baby. This can have a detrimental effect on both their finances and their marriages.

Help new parents carve out some quality time with each other and save them the cost of a babysitter by sponsoring a night out.

With so many demands on their time, new parents may be inclined to order or eat out often. Prepare and freeze some home-cooked meals that are easy and inexpensive.

By being available to help, you get to spend time with the new grandchild and help your family financially.

Share your wisdom. New parents are notorious for turning bouncing bundles of joy into bundles of debt. They spend too much on nurseries, cute things and clothes that fit for no time at all. Share your own experiences on this front to provide guidance without being too pushy; the savings will be substantial.

For the parents:

Check life insurance. As with any major life event, the arrival of a baby is an opportune time to ensure you’ve got adequate life insurance. With a price tag of $235,000 – not including college – you want to make sure you have your bases covered. Use the online calculator at to see where you stand.

Bone up on the tax code. Tax benefits like the child tax credit and child care credit are all part of the lexicon of parenthood. Get familiar with the rules, and don’t leave any money on the table. There will be plenty of opportunities to use it.

For both:

Save for college. According to the College Board, a four-year public-college education currently runs about $17,000 for tuition, fees, room and board. Combine that fact with inflation increases trending north of 5 percent, and you need to start saving sooner rather than later. Parents and grandparents can both use tax-advantaged 529 college savings plans to get the ball rolling.

Update your will. Grandparents may want to update their estate plans to reflect their wishes with respect to a new grandchild. And the baby’s parents should do the same. For parents, a will is critical because it names both the physical and financial caretaker for the baby if something happens to you. You don’t want any confusion regarding these instructions.

Whether the new baby resides under your roof or you just get to spoil him or her, make sure this stuff gets done.

J.J. Montanaro is a certified financial planner for USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.

This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.USAA means United Services Automobile Association and its insurance, banking, investment and other companies. Banks Member FDIC. Investments provided by USAA Investment Management Company and USAA Financial Advisors Inc., both registered broker dealers. USAA Financial Planning Services® refers to financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer. Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner TM in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.