American individuals are known as one of the worst savers in the developing world with only saving approximately 6 percent of their income compared to the recommended 20 percent. Furthermore, when your clients have a desire to raise a child, saving becomes more challenging. When your clients are expecting a child, it is important that their financial plan is updated as well. With the expansion of your clients’ family, a new arrangement must be made so that several expenses can be put into consideration.
Updating The Budget
A crucial part of expanding the family involves incorporating new expenses into their budget. How much money do they expect to spend on baby formula, diapers, clothing, or childcare? On top of these factors, one-time purchases such as strollers and carriers should be considered, as well. As the child grows older, expenses like baby formulas and diapers can be replaced with other expenses like extracurricular activities.
Although college may seem far away, it is critical you discuss with your clients the significance of college savings at an early start. Too often parents set aside their retirement savings in order to pay for their child’s expenses. In fact, most American adults continue to pay for their child’s loans well into older age, which impacts their ability to plan for retirement. Providing options for future parents at an early start can prevent placing significance one over the other.
Along with these factors, advise your clients’ to add their children to their insurance policy. If their insurance policy does not cover all medical expenses for their child, consider updating their financial plan to include those costs. This will become another area that would require saving.
Once these factors have been considered, make sure that your clients are aware of applicable tax breaks. There are exemptions your clients’ can apply for simply because they have a child. Advise them to contact a tax professional before they file.
Updating your clients’ plans allow for appropriate planning for future expenses such as children’s college savings and retirement. It is important that these factors are considered in the early stages of planning to allow for adequate preparation for the future. These next-generation family members have the potential to become your next clients and you should plan for their arrival just as well as their parents’ retirement.
Genivity is here to help. We place emphasis on helping advisors with goal-based financial planning that incorporates health wealth factors to provide personalized reporting. Genivity can assist in helping your clients’ understand the health factors that should be considered in terms of financial planning. This service lays the information in an easy-to-read manner. Once your client determines what factors impact their retirement planning, they will place further emphasis on their children’s health. This can prevent future health expenses for future next-generation family members.