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Unexpected Expenses

Preparing for Costs Insurance Won't Cover

By Megan L. Fowler, MSJ

Most parents are hit with unexpected expenses for their children that insurance often doesn't cover, such as braces. Here are some suggestions to better prepare for what may lay ahead of you, financially, on your parenting journey.

"There will always be events that we know will come, we just don't know when, and medical expenditures are a big part of that," says Cate Williams, vice president of education for Money Management International, an online consumer credit counseling service. "The easiest way to stay on course financially is to work from a budget. In that budget, create a 'put and take' account for things such as home and auto repairs and medical expenses." This is not an investment account, but rather a "parking" account until the financial event happens. "If possible, $75 to $125 per month should go into this type of account," she says. "By creating this saving habit, you will always have a cushion to even out the hills and valleys in your cash flow."

Tracy B. Stewart, an accountant and certified financial planner with Stewart Financial Consulting in College Station, Texas, suggests depositing enough money into that account to cover all of your bills. "You should set up a budget with these costs built in," she says. "Review what you have paid in the past. Discuss with your doctor, dentist and vet what expenses are forthcoming." For example, braces can be predicted to some extent.

"Take the combination of these two sources. Count the months until you estimate the costs will be due," says Stewart. "Divide the estimated costs by the months until due, and you have your monthly budgeted amount. This is the amount you need to put into savings each month. Then you should have the money to pay those bills."

Want to see more?

• For a Rainy Day and Beyond: Start Saving Before Baby Arrives
• Medical Emergencies Without Insurance: How to Get the Help You Need Without Going into Debt
• Money Sense for New Families: 5 Tips from Financial Planners
• Talk about it!