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Financing A Family

The Current Economy Has Many Parents Worrying About Money. Here’s Expert Advice On Everything From College Savings Plans To Everyday Budgeting

With more families than ever feeling overwhelmed about their finances, we thought it would be a good time to check in with some financial planners and experts for advice on key issues parents are concerned about. The good news is that it’s never too late to start getting your money matters in order.


When creating a family budget, think of it as a step toward financial freedom rather than a burden. “Take a positive look at your life and the things around you and say, ‘These are all of the things that are really important to me; I can use this opportunity to get rid of the things that aren’t that important,” says Greg Braca, president of TD Bank’s metro New York branch.

The first step is to take a look at your expenses: Assemble paycheck stubs, at least two months’ worth of bank statements, and two months of credit card payments. Judy Lawrence, personal finance counselor and author, suggests both parents work together. “You start to see that the kids’ school costs this, the pets cost that—and suddenly it’s not about ‘You spend this’ and ‘I spend that,’” she says. “It’s about, ‘Wow, our lifestyle costs a lot; what can we do as a team to make some adjustments?’” Lawrence recommends organizing expenses into four categories: fixed expenses (anything you pay on a monthly basis, i.e. rent); fixed variable expenses (monthly expenses that vary—i.e. grocery bills); discretionary expenses (i.e. a new cosmetics product, a Starbucks run); and non-recurring expenses (i.e. vacation).

When it comes to saving, “You don’t wait until the end of the month to see if you have any money left,” says Lawrence. Instead, put a certain amount of money into savings each month, and consider this a fixed expense—a good rule of thumb is to save at least 10 percent of your income. Make it a goal to store up what Lawrence calls “real emergency money”— enough to cover 6-8 months of expenses.

Focus on the present, work on steadily erasing any debt, and be realistic. “If the budget doesn’t allow for college savings, don’t feel bad that you’re not funding your child’s education at the moment—you just can’t do it,” Lawrence says. But sometimes, parents can find ways to cut back. “Would you rather fund those birthday parties, or would you rather be putting $100 into a college fund?” she asks.

— Theodora Guliadis


Although it might sound intimidating, most financial experts agree that you should start saving for college as soon as—if not before—your child is born. “Regardless of your financial circumstances, time is your greatest asset,” says Kalman Chany, author of “Paying For College Without Going Broke 2010,” who recommends that parents start saving for college nine months before their child is born.

When it comes to creating a successful college savings plan, there are a few key things to keep in mind. First, says Chany, “Find out if you are likely to qualify for aid or not.” Next, you need to consider the various savings options that are available, such as 529 plans.

“The real advantage of the 529 plan is that it extends well beyond undergraduate degrees,” says Ed Ferko, Senior Manager in Vanguard’s Education Markets Group. “It can be used for graduate school, community colleges and many technical schools that participate in the Free Application for Federal Student Aid (FAFSA) Program.”

Last, Chany reminds parents to remember “the lesson to be learned from the market meltdown of 2008: As your child gets older, you want to be transitioning your asset allocation into more fixed income investments.”

—Jean Halloran-Monaco


Many New York parents struggle with the desire to provide their children with the best they can afford without leaving themselves with a depleted savings account. For families looking for expert wealth management advice, hiring a financial advisor or planner is a great starting point. “The earlier you start saving, the more [time you allow compound interest to go to work],” says Douglas Famigletti, Chartered Financial Analyst (CFA), partner and managing director at Griffin Asset Management.

“Parents shouldn’t get intimidated when they hear what they should be setting aside for college; doing anything is better than doing nothing.”

When choosing a financial advisor to work with, Famigletti believes one should conduct “due diligence like you would for your family’s healthcare providers.” Often, the best way to connect with a financial advisor is through a referral from a friend or family member.

But, how do you tell if a particular financial advisor is a good match?

First, choose someone whose personality is a good fit for your family. “Some of the best investment advisors in the world may not be the best match for a certain family even though they are highly qualified,” notes Famigletti.

Next, look for these key traits:

1) Someone who provides a high level of customer service;

2) credibility with the advisor’s firm, its people, and history; and

3) transparency of fees. Lastly, keep in mind your financial plan should be tailored to you. “The plan’s financial goals and time horizon should be specific to you and your family,” points out Famigletti.

—Kristen Duca


“When people think of life insurance, they think of the end,” says Larry Bahr, financial consultant for AXA Advisors. He recommends that parents ease their discomfort by thinking of life insurance as “a financial tool that we’re all using.”

When considering the amount and type of life insurance that works best for your family, have an honest conversation with your partner about your family’s priorities. Beyond discussing immediate needs, such as mortgage payments and childcare, also discuss goals, such as saving for your children’s college educations, a retirement fund and donations to charities.

When you’re ready to choose a plan, know that life insurance can be broken down into two types—term insurance and permanent insurance. “Term plans typically cover you for a specific amount of time; we often say it is like ‘renting’ insurance,” explains Scott Berlin, senior vice president of the Individual Life Department at New York Life Insurance. Typically, parents purchase term insurance for a 20year period so that their families can maintain a certain lifestyle until their children are out of the house. Permanent insurance, on the other hand,

“is designed to provide death benefit coverage for your entire life and build cash value that you can borrow against tax-free through loans,” according to Berlin. Thus, while permanent insurance is more expensive, it offers you an opportunity to build up “cash value,” which Bahr likens to building up equity in a home.

When it comes to choosing an insurance company to work with, Berlin recommends looking for a long history of stability and strength. “Remember that you should be planning for the long term, so the company you choose needs to be able to fulfill its promise to you far into the future,” he says.

—Heather Peterson


“The most important thing parents can do for their families is have a will, and the sooner they draft one the better,” says financial journalist and author, Stacey Bradford. Drafting a will can be as easy as using software like Quicken Willmaker, but Bradford says that as soon as you acquire assets like real estate, life insurance, etc., it’s best to bring in a lawyer.

Later, as you have more children, your financial situation changes or becomes more complicated, or any other significant life changes occur, your will should be updated. And instead of locking it away in a bank, a copy should be kept in a fire-proof box in your house, as well as with your lawyer.

Most important, Bradford says, is that “the whole point of having a will when you have children is because you want the guardian in place. It’s the only legal way to make your wishes known.”

Last, another component to writing wills that parents often overlook is the fact that if your spouse passes away and has independent assets, those assets are split between the surviving spouse and children—meaning the surviving parent would need to go through a trustee to get access to the children’s money they need to raise them. “It can be done, but it’s a hassle—so you really want to [write] the will so that all of the money goes to the surviving parent,” says Bradford. G

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