If you’re thinking about starting a family in the next few years, chances are good that you’ve thought a bit about your finances and saving money for children.

The cost of child-rearing is getting more expensive. A recent report estimates that the cost to raise a child is nearing a quarter of a million dollars. But careful planning and saving can go far to alleviate the financial stresses that go along with having a baby.

Cut Back on Spending

You may still be a few years out from having your first child, but that doesn’t mean you can’t start taking steps now to improve your overall financial health, which will help you with saving money for children soon. A good starting goal is to create a budget and cut out any unnecessary spending in preparation for your life as a family.

“If someone is looking to cut back on spending, they need to start with a budget so that they can identify all the areas where they are over-spending or that can be cut back to prepare for upcoming expenses,” says Paul Moyer, founder of SavingFreak.com.

Are you or your partner considering staying home with your children? If you’ll be scaling back from two incomes to one, start trying out that lifestyle now by living off of one income and saving or investing the other income.

Look at ways to cut back that are relatively painless. For example, look for a cheaper cell phone plan, make your morning coffee at home or dine out one less time per month.

Used baby gear is another great way to save. In the early years, children grow out of clothing and other items more quickly than you may realize.

Double Down on Saving

Saving money is always a great idea, but it becomes even more critical when children enter the picture. Of course, you might already be thinking about day care and educational expenses, but you may need to factor in other things like health care, too — starting with your baby’s delivery.

“Parents-to-be get wrapped up in the joys of expecting and forget to look ahead at the looming financial adjustments they will need to make,” says Andrea Woroch, a consumer and money-saving expert, and new mom. “Having a baby is expensive, especially with the short-term and long-term costs, like child care, medical expenses, formula, diapers and, of course, future education.”

In the short term, make sure your savings goals include a three-month emergency fund. Then start funding a nest egg toward college tuition for your kids.

Consider a Life Insurance Policy

It’s one of those things that may not have crossed your mind in your earlier years, but once you start to think about growing your family, acquiring life insurance can become more important.

“Term insurance is very cheap, and it makes so much sense to have insurance in case something happens to you or your spouse so that you’ll be able to pay off debts, replace lost income and more,” says Michael Minter, managing partner of Mintco Financial and father of two boys.

Remember Long-Term Goals

Many new parents will likely hope to fund at least part of their child’s college education. Explore the plans available in various states to determine the best route for saving up for college. But before saving for your child’s college, it’s also smart to build up your own retirement nest egg.

“Parents are often tempted to save for their children’s college education when they can’t afford to put money away for their own retirement,” says Sugandha Jain, director of accreditation at Kids ‘R’ Kids Learning Academy in North Austin, Texas.

“The problem with this strategy is that, while students can get a loan for college expenses, parents can’t do the same for retirement. Parents will not be doing their children any favors if they fund their kids’ college expenses instead of building up their own nest eggs, only to have to rely on their children to support them in their old age,” Jain says.

The bottom line is it’s important to weigh all options as you save for children and your own future, considering what will make most sense for your lifestyle and your long-term goals.

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