Friends of mine who are soon-to-be parents often ask how much it costs to raise a child, or a baby for the first few months, or how much money to put aside in a Flexible Savings Account for delivery costs. While there are many resources out there to help answer these questions (just take a look at a recent Wall Street Journal blog entry that mentioned the US Dept. of Agriculture estimate of $223K to raise a child born in 2009 to maturity), by far, our biggest expense has been unexpected health bills.

Our current cash outflow right now is $120 weekly from sending our son to speech therapy once a week, because he’s not speaking enough words for his age. This doesn’t include the evaluation itself, which cost $750. I count ourselves lucky because our PPO insurance will cover 80% (with no maximum, assuming I read our limits correctly).

To be honest, I sometimes can’t tell if, by being in the uber-competitive Bay Area, we’re alarming ourselves unnecessarily with my son’s speech situation, but since the speech therapy can’t hurt and we’re being told there’s a chance he has a more serious condition causing his speech delay, we of course want to give our son the best chance he can get early on.

I know of friends whose insurance would either not cover this type of health issue or max out at a particular amount like $4K and cannot imagine how much of a drain something like speech therapy could be on a family’s situation, let alone more serious health conditions. And then I think of all the kids and families out there who can’t afford this sort of help, or early intervention, and really feel terrible.

If you’re a parent, what’s been the most unexpected financial cost or change to your financial life that you’ve had to make so far? I’d be curious to know!

A few weeks ago, I was fortunate enough to watch a video talk by Burton Malkiel, author of A Random Walk Down Wall Street and more recently, The Elements of Investing. In the talk, he reviewed his six fundamental strategies for successful investing and the data that supported these tenets:

1. Do not try to time the market
2. Use dollar cost averaging
3. Rebalance yearly
4. Diversify, diversify, diversify
5. Costs matter, and
6. Use index funds

I admit that although I’ve tried to follow all of the items above to some extent or another except for “rebalance yearly” but haven’t been good at consistently doing most of these over time. For example, most recently, I gave into fear and sold half my holdings at the wrong time, right in March 2009. That experience along with the wisdom of someone like Mr. Malkiel convinced me that I needed to adopt a long-term strategy that would alleviate emotions from getting into my investment decisions for at least the next year.
Read the rest of this entry »