Author Topic: 18 Year Plan starts now - Planning for First Kiddo this year  (Read 151 times)


  • 5 O'Clock Shadow
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18 Year Plan starts now - Planning for First Kiddo this year
« on: January 28, 2023, 01:33:01 PM »
Hey all, hope you're well. Looking to the hive mind for what I might be missing for family finance steps as well as kiddo-related steps, as free time for fun mustachian research is shrinking fast...

BLUF: We're expecting in April, and I'm transitioning from a mindset of Dual-(or Single)-Income-No-Kids to Head-of-Household and I'm behind on what brilliant things I ought to do on the personal finance side of life, and would please like some suggestions.

Current Income, Savings, Spendings, Cash:
  • In 2022 we were lucky (and worked a lot of extra shifts) and had a MAGI that excludes us from funding a Roth, so combined income just over the 214k limit.
  • Savings is partly equity in a house with a cheap mortgage and about $1m in savings spread across Roths, 401ks, safety nets, and brokerage accounts.
  • Our cash position is probably too 'good' (easily 18 months of cash, partially because we saved for a car but ended up financing it as the loan rate is less than savings interest right now) but I'm okay with that - I'll hold on to it until we have a healthy kid (fingers crossed) and then put it somewhere smart.
  • Besides the new car loan that we could pay off today, our expenses are pretty low... not true mustachian but good for two working individuals taking nice vacations and feeling like we can spend as much as we want in the categories that make us happiest. We have short commutes, prefer to cook at home, no gambling habits, use the library, bike commute when weather permits, and a 'fun day out' is taking sandwiches on a mountainous hike in glorious public parks.
  • We also typically max out 401ks, used to max out Roths, max HSA, and keep saving above that.

Near Term Plans:
  • We're both on one employer health plan that we'll be on all year, HDHP with HSA that's well funded from prior years.
  • Mom will be taking 4 months or so off, mostly unpaid.
  • Dad will be taking 6 weeks off over the first year, all paid.
  • Kiddo will start daycare at 4-5 months, up to 5 days a week at $2k a month.
  • As a result, our income is going to be the lowest it has been for a while due to the time off but still 160-200k ish depending on how many shifts and some other wildcards.
  • We plan to start a Trust - simply on the basis that my old tax professor told us they cost $500 but will save your beneficiary 10x that amount or more, but not set in stone because clearly I'm spouting 10 year old advice.

  • We are not on the near term FIRE plan, we like our jobs and with lots of unknowns in kid raising, we plan to stay employed for another ~18 years give or take... we hope to make career path choices that let us have some income security, personal growth, more adult friends, but also appropriate time to spend with kids.
  • We want to have a comfortable amount of money set aside for kid things - ideally our financial planning can help getting them started in life, such as with education costs if they spike as US college costs have in the last decade but maybe more flexible than just college - house down payment, 'loan' to help them with a startup, who knows...
Beyond that, we don't have any solid plans - I've thought maybe we'd start some Roth Conversion ladder work since our income dips, but I don't think it makes sense since the dip isn't that large. Do we... start a trust? 529? yearly gifts to a kiddo brokerage account? Pay them for chores with the money going into a Roth? Buy a rental with the plan to leave it to them with a stepped up basis benefit? The list of options seems endless!

Basically, I'm looking for time phased options for smart things to do in year zero, 0-5, 5-12, 12-18 - either very broadly stated (like a link to a relevant blog) or stuff that is specific to our case.

Thanks in advance!
« Last Edit: January 28, 2023, 01:36:54 PM by ridebikeseveryday »


  • Magnum Stache
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First:  congratulations!!

Second:  Do you have a will?  Have you identified a guardian?  Do you have life insurance?  If not, do those before anything else. 

Do not take advice from the peanut gallery about setting up trusts and the like; things have changed dramatically with estate tax and such over the past number of years, and you need serious advice from an actual expert.  Do not fuck that up, because it can cost your heirs thousands of dollars and a lot of unnecessary hassle.  If there's one thing I can convince you of, it's that this is not a DIY project.  I'm a lawyer, and I still hire an expert for my own will (and yes, I have a trust, but it was written carefully to provide flexibility for changes in estate tax exemptions).  The rules are complex, and to make it worse, state laws are very different from each other, federal laws are different from state laws, and they all tend to change with the political winds. 

Beyond that, my advice is to give it a year before you even think about major changes to your financial plan.  You don't yet know what is going to happen, how both of you are going to feel about going back to work, or what your day-to-day financial life is going to look like post-kid.  So give yourselves time to figure out life with an infant, then figure out how to structure your finances around it.

When you do think about that, really, I'd stick with the Investment Order.  Your first priority is to keep your family protected and your future on track.  Once you have all that covered, you can focus more on saving for college, optimizing savings vehicles, etc.  In the interim, just keep shoveling money away in your tax-protected accounts as you've been doing.  (And yes, keeping that cash cushion for now is awesome, because it gives you immediate flexibility to handle whatever happens over the next year).