on baby finances

over the last few months, i've read 20+ magazines about pregnancy and parenting. out of hundreds of articles, only one has even touched on anything remotely related to baby finances, and that was how to handle kids complaining about their tooth fairy money (or lack there of). this blows my mind that magazines spend so much time talking about how to prepare for a baby by decorating its room, but do not even touch on how to financially prepare for the baby's arrival.

and that is exactly what is wrong with society today. i realize Forbes and others produce literature about how to set up ESAs and invest wisely for a child's future, but how many mothers to be read these articles? how many doctors offices carry anything of the sort? even if mothers did read them, how many would understand the often complex language and implement investment ideas? perhaps the reason pregnancy magazines spend little time discussing financial issues is because of the sensitivity of the subject. not only are people easily offended by talking about money, but it negates any warm fuzzy feeling the other articles about crocheted baby booties and the like create. however, my blog is not meant to make anyone feel mushy inside, so here are my thoughts on baby finances...

parents need to get their own finances under control before they try to figure out how to save for their children's future. i think over 75% of america needs to focus on this. dave ramsey suggests '7 baby steps' that i believe in (and if you haven't listened to his cds or attended a financial peace seminar, you should even if you think you know everything about finance):

1. make payments on all of your debts and work to save $1000 of emergency fund money.
2. pay off all debts except your mortgage as fast as you can.
3. create a full-fledged emergency fund of 3-6 months worth of income.
4. direct 15% of your income into IRAs and retirement funds
5. set up ESAs or 529s for your children
6. pay off your house as fast as you can (ramsey suggests only doing 15 year loans) and become financially "ultrafit" ha.
7. invest to where you live off the returns of your savings and give as much as possible.

i realize these may look like simple steps (and that is the beauty of ramsey's teaching), but that does not mean they are easy to implement. of course everyone would love to have their home and debts paid off as fast as possible. with a conscious effort every day, though, financial freedom for parents can exist and is essential for paving the way to a solid future for your children. james and i are by no means experts on finance or make a ton of money, but we do have specific goals for our future which should help relieve financial stress for our family and children:

1. pay cash for everything possible. for us this means paying cash for all automobiles (and expenses), doctor and dental visits (paying our insurance deductible completely for our baby before it is born), furniture, college tuition (james is taking 8 credit hours this semester for emt) etc. we also try to take advantage of discounts by paying in full for certain things like our gym membership, which saves 10% and eliminates monthly payments if something were to happen to either one of our jobs decreasing our monthly income.

2. pay off our home as fast as possible (10 years). we would love to eliminate our monthly payment when our children are young and use that money for vacations and other fun things.

3. pay for all of our children's college expenses. (i am really big on this. i know all parents cannot afford to do this, but i hate seeing my friends in debt and the awkwardness it can cause in a marriage and with in-laws when one person brings in debt and the other does not. it is so much easier to get ahead with finances if you do not have large loans).

4. buy our children cars when they graduate college (this is something our parents did and i would like to pass on).

5. if possible, help our children with down payments on their first home purchase.

6. pay for our children's weddings (girl) or rehearsal dinner/honeymoon (boy).

wow this is way longer than i intended. if you are still reading, thanks for being my friend :). i hope james and i can look back in 20 years and say we accomplished our goals and pass on the sacrficial love through giving that our parents taught us. love you all and hope you have wonderful weeks!!