• BY amfcon
• 21 Dec 2022 INSURANCE

Raising children and their education is really very expensive. In addition, bringing up healthy children takes a lot of effort and time. My wife and I have raised three children. Everything turned out to be a success. This is how we planned when our first child was born, then our second, and finally our third.

First, what are your earnings, expenses, and savings (EES)? It cost a lot for raising a child from birth to age 18. Some believe it’s around $200,000. 

Second, as a result of the Family Medical Leave Act (FMLA), parents are entitled to 12 weeks of unpaid leave after giving birth or adopting a child. Some employers offer paid parental leave. As well as make sure you have enough sick leave and paid annual leave saved up. 

Third, make sure you have enough money saved up to cover unexpected emergencies and the saving should be for at least 4 to 6 months’ salary in advance.

Fourth, do you have life insurance if unexpected something happens to you?  So the money from life insurance can take care of your loved one. 

Fifth, what will be the college education cost, and where the child will be going to college? 

Sixth, for college education savings: Most financial advisors suggest starting  saving $250 per month from the day your child is born or adopted. This will give you enough savings for your child’s college educational expenses. Here I am introducing two plans:

• State 529 College Education Saving Plan.

Let’s say you are saving $250 per month at a 7% compound interest rate and no broker fee.  After 18 years there will be around $107,680 in the State 529 College Saving Account.  

Future = [A x (((1+r/n)^nt – 1)/(r/n)) ]  =$107,680

At a 7% return, your child will have $107,680 for college

There are many restrictions when it comes to using these savings. (1) Can’t use it for other than college expenses. (2) If the child decided not to go to college, you have to pay a 10% penalty and tax other n withdrawals. 

1. An IUL insurance (IUL Investment) plan. Very few people know about this plan and it’s getting more popular these days. 

Let’s say you are saving $250 per month at a 7% compound interest rate and no broker fee. After 18 years there will be around $119,600 in an IUL Account.   

At 7% return your child will have $119,600 for college

You can use the money wherever you want. (1) If your child decides not to go to college, he/she can use the money to buy a business or some other investment. (2) Continue to pay the $250 monthly premium (it will not change with age) to guarantee retirement at age 65. (3) He/she will have long-term medical care. (4) No need to buy life insurance anymore.

                                          Table 1a: Every Year Withdraw for College 

                          Table 1b: 2nd and 3rd Year Withdraw for College

                      Table 1c: After 4th Year (Graduation) Withdraw for College

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