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Starting a Family Finance Tips

7 Money Tips For Couples Starting a Family

We're thrilled to present this smart Business Insider story here on Savvy!

Middle-income parents will spend nearly $227,000 in 17 years for children born in 2010, according to the United States Department of Agriculture.

But don't let that scare you — saving for a family can actually be fun if you know what you're doing.

"The most important thing to understand is that your priorities are going to change and your spending habits need to change to reflect those changes," says Stuart Ritter, a financial planner at T. Rowe Price.


With Ritter and other financial experts' help, we'll help you prepare.

Invest in a 529 savings plan

Saving for your child's education is crucial to his or her success, and 529 plans are tax-advantaged college savings accounts that are available in all 50 states.

Most are free to set up, while some states require a minimum of $25 to open an account, says Adam Koos, a certified financial planner with Libertas Wealth Management. Anyone can contribute and take advantage of the tax benefits.

Related: Seven Simple Tips to Help Couples Buy Their First Home

Open the plan before your child is born, says Ritter, and name yourself the beneficiary. You can change the name on the account once your child is born.

Read on for more.

Get family and friends to pitch in

Koos suggests signing up for UPromise, a rewards program that allows friends and families to contribute to a child's 529 savings plan.

When participants spend money with one of UPromise's affiliates, the company funnels cash back into the child's account.

"While the accumulation of benefits isn't huge, it's a no-brainer to do something rather than nothing," Koos says.

Spring for hand-me-downs

Nursery room essentials, toys, and clothes can get pretty expensive, though infants grow out of them quickly.

Don't skimp on items like car seats or strollers, which are prone to recalls, but do look to relatives or friends who may have baby clothes they no longer need.

You can also use sites like eBay to find used items in good condition. "Shopping online is one huge way to save money," Koos says.

There are also several secondhand online marketplaces to help parents unload baby gear. Try sites like ThredUp,, or SwapMamas to score bargains.

If you're unsure of an item purchased from a reseller, check with the US Consumer Product Safety Commission to see if it's safe.

Enroll in a health savings plan

Joan Koonce, a professor and financial planning specialist at the University of Georgia, says prospective parents should put money into health savings accounts or flexible spending accounts if they're offered by their employer.

Both offer pretax savings to cover medical bills. One caveat: Koonce warns that with health savings accounts there is a limit to how much money you can contribute and to make sure you qualify.

Purchase life insurance

Life insurance can replace the income a spouse or child is dependent on if the family breadwinner dies.

And purchasing life insurance to cover your salary won't be as hard as you think, Ritter says.

Getting a $750,000 30-year term insurance for a 27-year-old male, for example, averages around $50 per month, which isn't too pricey.

Save for retirement

A big part of starting a family is providing the security your child needs, not only when they're young, but for the rest of their life. Which means being able to support yourself in retirement.

"What's important when thinking about saving for a family is that you don't become a burden to your children when you get older," Ritter says. "If you haven't saved enough for retirement, what ends up happening with families is the older parent becomes a massive impact on the child's lifestyle."

Ritter suggests saving 15 percent of your income per year, if you can.

Create a budget

"Lay down on paper what you've actually spent the last few months. The longer, the better, so as to get a good grasp of your spending habits," Koos says. "Then, once you've got your numbers down, you need to look for places you can scale back."

That might mean packing your own lunch or skimping on extravagant beauty treatments.

Sit down with your spouse to draft a budget and strategize your saving.

Check out these smart Business Insider stories:

What You Need to Know About Marriage and Personal Finance

Guess Who Made the List of Top 10 Cheapest Celebrities

Student Protest Forces Sallie Mae to Alter $50 Fee Against Unemployed Borrowers

Fifteen Smart Things You Can Do With $100

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