Having Children
As your family grows from two to three or more, it’ll add love and complication to your life. Each little bundle of joy is also a dependent, changing your tax situation. And let’s not forget—brace yourself—the ever-climbing costs of higher education. Careful planning from the outset can help you manage the chaos and keep your eye on the prize. Here are some of the ways McRae Capital Management can help.
Updating Your Wills
Having a child is a perfect time to update your will: This legal document that outlines how you wish for your assets to be distributed after your death will also determine who’ll care for your minor children if you pass away. Naming a guardian and in some cases a trustee, helps ensure your child is provided for according to your wishes—not by the courts.
Accounting for New Expenses
Children are expensive—childcare, clothes and toys, education, travel gymnastics—and it’s important to update your budget to account for these new costs. You’ll want to save all you can during these costly years, including making sure you’re taking advantage of all applicable tax benefits. McRae can help you stay on track.
Expanding Insurance
With the arrival of a child, your insurance needs typically change as well. You may want to switch to a broader family healthcare plan or to increase your life insurance coverage to provide for your child’s higher education, for example. McRae can help you make sure your insurance coverage evolves with your family.
Saving for College
College costs continue to rise, so the sooner you begin saving, the better. The 529 is a typical college savings plan that offers significant tax benefits: Contributions are made with after-tax dollars, the funds grow tax-free, and withdrawals are tax-free when used for qualified education expenses. McRae Capital Management can help you determine if a 529 plan is right for you and to select investments within your plan.
Adjusting Risk Tolerance
For many, having a child (especially a first child) serves as a moment to reevaluate their risk tolerance and take a more conservative approach to investment accounts. McRae can help you protect the assets you’re building for your child’s future and develop an investment strategy that balances your goals and evolving risk tolerance.
Planning For Retirement
Nobody wants to be a burden to their children later. As you start having children to your family, one of the most important financial planning strategies you can implement taking care of your own financial future. Being self-sufficient isn’t selfish at all—it makes sure your children won’t have to take care of you once you reach retirement age.
Connect your finances to what matters most
Having children is only one of many life stages where smart financial planning can make a difference. If you’re interested in learning more, please read our Starting a Family Commentary.
