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Tess Vigeland: One more look at the topic of kids and money. Only this one is pre-partum. We heard about this hospital in Maryland that was holding a financial planning seminar for expectant parents, and we immediately thought of reporter Nancy Marshall Genzer for the assignment.
Her twin boys are 18 months old now. Given that she’s part of the Marketplace team, and we are all — of course — complete and total experts with our money, it’s the kind of thing she would have covered a long, long time ago, right?
Nancy Marshall Genzer: When you’re pregnant, you get all kinds of unsolicited advice: Let them cry it out. Pick them up before they cry. No pacifiers. Nurse them for six months. A year. Two years. And whatever you do, get your financial life in order and start saving for college. Now.
The boys are toddlers now. My husband Jan and I are decent savers. But we’re even better procrastinators. We don’t have a solid financial plan. So even though I’m a financial reporter, I jumped at the chance to trek out to a hospital in suburban Maryland to cover its financial planning seminar for expectant parents. Maybe I would learn something.
Before things got started, I sat down with Stuart Ritter, the financial planner from T. Rowe Price who would lead the seminar. He began with a body blow: How much it actually takes to raise a child from birth to age 17.
Stuart Ritter: The total cost according to the Department of Agriculture is about $222,000. And not to scare you even further, that does not include any savings for college.
Marshall Genzer: Ugh.
Ritter: OK, Nancy’s going to need some oxygen. Do we have that anywhere?
I recovered in time for the seminar.
Ritter: OK each of you has a piece of paper that says, “prioritizing exercise.”
Ritter told me and about a dozen couples to get our finances together. I was feeling guilty enough about being behind. Then I met Lanyn and Duwayne Taliaferro. She’s not even pregnant yet. But, here they are, doing their homework ahead of time, sitting in the front row. I tried not to hate them. After the seminar, Duwayne told me they’re both scientists and planners.
Duwayne Taliaferro: I think as scientists we’re used to planning ahead and doing the research before we actually act. And so that kind of fits into who we are.
Our research falls into the realm of “Hey, we’re out of diapers!” The seminar put me into full panic mode. Stuart Ritter had given us a checklist to take home, a grim list of obligations marches down the page. Retirement. Wills. Guardians for our kids. Life insurance. College savings.
A couple nights later, I showed the checklist to Jan, my husband. We were sitting down in the kitchen to have “the talk.” The one we should’ve had before the twins were born.
Nancy: So, I went to this seminar. And I got a bunch of information.
Jan: That’s wonderful. Was it entertaining?
Nancy: No, it was kind of scary.
I go over the checklist with Jan. First thing: Retirement. Ritter says we should be sure we’re saving for retirement before socking away college money. Otherwise, we’ll end up broke, moving in with our kids. Ritter says it’s like what flight attendants tell you: Secure your oxygen mask before helping your child. We are actually saving for retirement. I want to check that off. But Jan reminds me:
Jan: We’re planning, but we don’t have enough in there. We’re not going to be able to live on that.
Nancy: Well, at least we’re doing it. At least we’re saving. We’re not saving enough but we’re trying. So I’m going to —
Jan: Is this where we can ask for a raise?
Nancy: That’s a good idea.
Moving right along. Life insurance is next on the list. We have some. We definitely need a lot more. As in, if you have little kids, about 10 times your salary. And assuming we don’t die young and leave our sons a mountain of insurance money to pay for college, we’d better start a college savings plan. I guess. Some parents don’t save anything. I kind of like the sound of that. They think the more savings, the less financial aid they’ll get. Wrong. Most “aid” is actually loans. It’s like saying you’re not going to save for a car, because if you do, you won’t get as big a loan from the dealer. So, the question now is how much to save.
Nancy: We have to decide what our priorities are and whether we want to live the good life now or do we want to save for college.
Jan: The good life? I’m happy if I have a chair. It’s a vacation. That’s a good life.
We decide to go for broke. Literally. Pouring every extra cent we have into a college fund. Here’s another body blow from Stuart Ritter: In 17 years, when our twins are heading off to school, the average private university will cost almost $96,000 a year. Times two for twins.
Now, we have a choice on college savings plans. We can pre-pay tuition, but that requires a big block of money. We opt for 529 plans, which allow you to save gradually. Sold.
We’re at the end of the list.
Nancy: I think we’re done. I feel pretty good. Do you feel pretty good?
Jan: I’m sitting.
Nancy: Other than that. This is good for us. We’re going to do this.
Jan: Absolutely. Let’s go.
A little more enthusiasm would be nice. And I wish he’d stop talking with his mouth full. But, at least we have a plan. If I ever run into those perfect, pre-planning scientists again, I can be proud. Our boys couldn’t care less.
In Washington, I’m Nancy Marshall Genzer for Marketplace Money.
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