This said essay is based on a conversation with Sophoan Prak, a financial advisor at vanguard. It has been edited for length and clarity.
I had my son Ian when I was 26. Looking back, I had little financial securitybut my husband Kosal and I were able to rely on family for help when we needed it.
Kosal and I always wanted more children, but when Ian was little, we split up. We were separated for years, but we finally had a happy ending when we got back together. After that, we tried to have a child for about four years. It was when I gave up that I found out I was pregnant with my daughter Allie.
Today, Ian is 16 years old and Allie is 6 months old. Allie absolutely adores her brother, smiling when he walks into the room. Ian is one typical teenager who would rather play video games with his friends than interact with a child. However, I see a relationship developing between them.
Having one child at 26 and one at 42 has made me reevaluate my child financial planning. Even though I am a Certified Financial Planner, the process of updating our finances has been intensive and is not over yet. Here are the changes we made.
I stopped contributing to Ian’s college savings
Every month I spend about $600 to $900 on diapers, formula, and other baby essentials. I’m lucky I don’t have childcare expenses since my mother-in-law watches Allie.
However, that money has to come out of the budget elsewhere. I am driving an older car to delay a large new payment. That decision was easy compared to the next one I made: stopping Ian’s monthly contributions 529 college savings account.
That choice was difficult, but I had to balance my family’s immediate needs with our long-term goals. Plus, Ian already has a well-funded 529, though he’ll still be applying for it financial aid for faculty.
On the other hand, I have started a 529 for Allie. I don’t contribute to it yet, but some monetary gift from loved ones in that account.
I’m estimating my retirement age
I haven’t slowed mine down retirement savings. You can borrow for college, a new car, and just about anything else, but you can’t borrow for retirement. That’s why I urge everyone to save 10 to 15% of their income for retirement. If you absolutely can’t afford that, at least save enough to get your company match if you have one.
My husband and I are still debating whether we should reevaluate our retirement timeline. I always planned to retire at 65. Allie will likely be in college by then, so I will have to consider not only our income needs, but also our insurance coverage as I decide when to stop working.
I updated our custody information
If something happened to me and Kosalli, my parents would get custody of Ian. I made this choice a long time ago. But as I thought about who should be Alie’s emergency carer, I was stuck. My parents are much older now and may not see it in adulthood. Even if they are, they may not have the energy for a baby.
I talked to Ian about it and mentioned that maybe he and Allie should have different babysitters. His reaction told me that he didn’t like the idea. Even if he is still not very interested in his sister, he does not want to live away from her. So, I asked my sister, who is willing to take both children if the worst happens.
I have learned that financial plans should be fluid
Life doesn’t always turn out the way we think it should. Relationships have hiccups. Babies don’t come when we want them to. And yet, one thing we can at least somewhat control is financial planning. Even though this is my job, it felt a bit overwhelming at times. There are a few things I still need to do, like increasing my life insurance coverage.
I’m trying to remember that I don’t have to have all the answers at once. I just like having a plan to follow and can always adjust later if needed.
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