This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Your Child Isn't Prince George? Save For These 4 Things

The most famous baby in the world right now is Prince George of Britain. But despite his fame and royal lineage, this young man will probably go through many of the same growing pains as other children over the years: teething, awkward growth spurts, acne, anxiety over who to ask to the prom (well, perhaps the royal ball in the prince's case) and so on.

However, one thing the new prince and his parents won't have to worry about is money. The royal family is estimated to be worth over a billion dollars, and this particular young man already has a pretty good job lined up -- the British monarch gets a salary that would satisfy most Fortune 500 CEOs.

In contrast, for typical families the joy of a new child is accompanied by a series of new financial responsibilities. These responsibilities can be extremely burdensome if you don't save up in advance -- if possible, starting from the time you first decide to have children. Here are some of the most prominent financial burdens parents may encounter.

1. Emergencies

Of all the financial emergencies which can befall young families, perhaps the most challenging is the loss of a job. Since providing food, clothing and shelter is a parent's most fundamental responsibility, you need to have a financial contingency plan in case you lose your job. The Bureau of Labor Statistics estimates that as of mid-2013, the median duration of unemployment was about 16 weeks, so you would do well to set aside enough savings to meet 16 weeks of expenses.

Many experts suggest high-yield savings or money market accounts for emergency funds because they allow immediate access, but since certificate of deposit rates can be much higher than savings account rates and the chances of tapping into the fund is small, you might do better with a CD and simply paying the penalty for early withdrawal if necessary.

2. Braces

At around $5,000, this is a major expense for many growing kids, and one often not fully covered by medical and dental plans. See if you can augment your health care insurance by participating in a health savings account through your employer.

3. First car

In this situation, your child should learn by sharing the financial responsibility. When you open a bank account with your child for this purpose, it is an opportunity to teach about shopping for the best savings account interest rates and how to monitor the account. A savings or money market account may be the best choice for this, since the money is likely to accumulate slowly over time.

4. College

According to The Economist, average tuition reached 38 percent of the median annual income in the U.S. in 2010, up from 23 percent in 2001. To afford this without smothering your child in debt, start saving early and consider a Section 529 plan to get tax advantages for education saving.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,113.85 -18.01 -0.11%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,816.5120 -22.1310 -0.46%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs