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How Smart Parents Do Their Banking

Maybe you're expecting a baby, or maybe you've already got a couple of kids, but in either case it's important to manage your banking strategies a bit differently when you've got children to take care of.

Of course, the basics still apply: don't spend more than you make, minimize costs whenever you can, keep a balanced checkbook, and pay all home expenses before you purchase extras like toys or treats.

But banking as a parent can be about more than that. Certain financial decisions become more important once you become a parent, and even if the stork hasn't arrived just yet, you may already be wondering things like, how will I pay for college?

First, make sure you've got the right kinds of insurance. This includes health insurance for you and your children, life insurance in case something happens to you, and disability insurance in case you are injured and need help providing for your children. Banking for these things doesn't have to cost a lot - just make sure you're covered for health emergencies (which happen often with kids), and enough disability insurance to cover about 65% of your income.

Next, be sure not to abandon your retirement accounts. Sure, banking the extra money every month might seem unnecessary now, but cutting corners today will be easier than doing the same in 30 years.

And finally, look into a 529 plan to provide college tuition for your children. A 529 plan allows you to start banking money today that is tax free so long is it's used for your child's education. There are two types of 529 plans: prepaid tuition plans, which let you lock in tomorrow's tuition at today's rates, and college savings plans, which let you choose from a menu of investments and offer more return potential, as well as risk. Whichever you choose, by making these decisions today you'll be protecting the financial well-being if you and your children for years to come.