How to Save When You’re an Older Parent

© Flickr RF/Getty Images
© Flickr RF/Getty Images

For the first time in seven years, more Americans are busy making babies. 

The National Center for Health Statistics recently reported that the birth rate rose 1% in 2014, the first time since 2007. The seven-year decline has been attributed to the deterioration of the economy during the Great Recession—unsurprising when you consider that the U.S. Department of Agriculture estimates you’ll spend $245,340 to raise a child to age 18.

Women in their 30s and 40s have led the baby bounce-back, with birth rates rising 3% year-over-year for women ages 30 to 39. Birth rates for women in their early 40s rose 2%.

While the uptick suggests parents are feeling financially secure enough to start raising a family, later-in-life pregnancies do come with their own set of financial challenges.

Resetting Your Priorities

One of the hardest things for couples to do when they have kids later in life is to re-evaluate their budgets, says Mitch Kraus, a financial planner in Santa Monica, Calif. “Most people struggle in their 20s to get by, then in their 30s they’re in a decent career and making some money and they get used to the niceties in life,” he says. All of a sudden, money that went to spontaneous weekend trips or eating out has to be allocated towards child-care expenses and diapers.

Having had his first child when he was 38, Kraus knows that resetting those financial priorities can be easier said than done, especially if you’ve grown accustomed to a certain lifestyle.

“I hadn’t made dinner two nights in a row in 10 years,” he laughs. “It’s hard to transition back to some of these things.”

Of course, the demands on your money will vary depending on your kids’ age—and your own.

If baby is already on the way, start budgeting during your pregnancy. Many parenting sites have baby cost calculators to help you wrap your mind around just how much Junior will bite into your vacation fund. Pre-delivery is also a great time to revisit your life insurance policy to make sure your family would have the financial resources they need if you’re not around.

Once the baby is born, one of the most pressing concerns (especially for working couples) is daycare. A report last fall by Child Care Aware America found that in some states, the cost of full-time childcare is more than a year of in-state college tuition. (Exhibit A: New York, where daycare can cost $15,000 but in-state tuition and fees at a public college is about $7,500 a year.)

Andy Tate, a financial advisor in Minneapolis, Minn., reminds parents to view the cost of childcare and education as a fluid expense instead of separate costs. Once Junior goes to elementary school, you can reallocate most of the daycare money to a college savings account. Socking away some of the money you had been spending on daycare can help you catch up on college savings.

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Source: CNN Money | Jackie Zimmermann

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