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The Cost of Kids Some pros caution parents to put their own financial needs first.

MoneyMattersAt least there’s one thing Americans across the spectrum can agree on: Having children is expensive.

According to a statement issued by the United States Department of Agriculture in August 2014, “a middle-income family with a child born in 2013 can expect to spend about $245,340 ($304,480 adjusted for projected inflation) for food, housing, childcare and education, and other child-rearing expenses up to age 18.”

That’s not all.

This estimation does not include expenses related to pregnancy or higher education, both of which can vary dramatically. For new parents, there’s no question: It’s going to cost you. A question that does emerge, then, is how to budget efficiently as your family begins to grow?

“I liken financial planning for families to airplane safety measures,” says Lutherville-based financial planner Eric D. Brotman.

Noting that it’s “more important to put on your own oxygen mask first,” so to speak, Brotman suggested that “it’s much more important to save and plan for your retirement than your children’s education.”

Brotman, 44, has been both the president and managing principal of the Brotman Financial Group since its inception in 2003. Also a father, he reminds parents that there are plenty of ways to pay for college, which is one—if not the—biggest expense parents face. Whereas financial aid, scholarships, loans, etc. can make the ever-increasing cost of college more bearable, Brotman reminds us that no one supplies adults with loans for retirement.

Brotman went on to describe the too-common unfortunate reality of well-educated children … who have to take care of their parents financially later in life.

Once parents have taken care of their own future financial security, Brotman continued, “then we can start talking about saving for school.”

He explained that the “rule of thumb” for planning to send a child to a typical four-year college means putting aside $500 a month “from birth to matriculation.”

Parents also can look into 529 plans through the state of Maryland, with Brotman vouching for the website for those wishing to learn more.

Though Brotman is well aware that diapers, camp and other components of a child’s rearing can be pricey as well, “everything else pales in comparison [to education].”

But … what about that “everything else”?

Fred Jacobs, a 68-year-old environmental consultant from Pikesville, raised three children in the area, all of whom enjoyed childhoods well-fortified in sports, camp and the regular family vacation.

Jacobs says the secret for his wife Karen and he was learning early on not to live outside their means. The pair met when finances were much tougher than they would later become, with Jacobs just starting his business and his wife, later a dentist, still in school.

The two learned early on how to comfortably survive on a limited budget, a discipline they maintained as they raised their children.

“Dad was a stockbroker, so I sort of have an entrepreneurial bent and saw what was up ahead,” Jacobs says. “I didn’t want to have to be stressed financially.”

After selling his private consultant business when his children were still quite young, Jacobs made sure to “put a sizable amount” in mutual funds, stocks and 529 plans. He also “always maxed out my 401(k) from day one,” Jacobs says.

Having come of age taking the long-term grad student route, Jacobs and his wife also found it helpful to wait nearly a decade after getting married before having kids.

“This allowed us to get our careers in place and save quite a bit of money before starting a family,” Jacobs says.

Disagreeing somewhat with this logic, Brotman stated somewhat jokingly, “You’ll never afford kids, you just make it happen.”

Brotman is not alone though in his admonishment that parents should make sure to save for their own future before their children’s education.

Owings Mills’ Allen Cox has spent the last 45 years as an educator focusing on economics and entrepreneurship and received his Ph.D. in economics and education policy from George Washington University.

Acting now as the assistant director of financial education for the Maryland Coalition for Financial Literacy, Cox is a father of three sons and a grandfather of three grandsons. He, too, feels parents should make sure they’re taken care of before saving for their children’s future.

Cox suggested that parents need to start early with their children explaining the value of a dollar so they know “that thing at the bank in the wall has real consequences.”

Basic examples Cox presented included working with a child to plan on what toys he or she will use during playtime. Bringing the child on shopping trips and having them help with the budget can also help him or her understand that “if you spend money in one place, that automatically means you can’t spend it at the next best alternative.”

“Parents, as often as they can, should involve their kids in the economic decisions of the family,” Cox says, providing other examples such as having kids help scout locations for vacations and look into cost comparisons for airfare.

“All that will definitely help kids have a better sense of how much it costs to live and not feel so entitled all the time … It’s really important to hammer home the idea that it’s not how much you make, it’s how much you keep.” BC

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