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Budgeting Tips for Parents Expecting Twins

Sep 04, 2018 3 min read Heather Johnson

Key Takeaways

  • 529 college savings plans let you set aside pre-tax income for college expenses.
  • Think creatively to find daycare that fits your lifestyle and budget.
  • What is term life insurance? Find out to protect your growing family.

Having a child can be one of life's greatest gifts. Having twins? Life has given you double the joy — and double the financial anxiety.

The average middle-income American couple will spend $25,360 per year on twins born this year, according to U.S. Department of Agriculture (USDA) estimates.

Don't let the numbers make you see double. Follow these budgeting tips to determine how to invest money and save while raising healthy, happy twins.


Open or update your life insurance policy

With two children on the way, you'll need to update your life insurance policy to accommodate two additional dependents. How much insurance to buy depends on what your family would need if you weren't there to support them.

If you don't have life insurance, now is a good time to buy. That's because, generally, the younger you are, the less you'll pay.

You'll also have to choose between two types of life insurance: term and permanent life. If you're on a tight budget, choose term life.

What is term life insurance? As the name suggests, term life insurance covers your family for a predetermined time period, say, 20 or 30 years. Because it's more affordable than permanent life, which lasts your entire life, it's an effective way to provide for your family if you're not around.

Consider a term long enough to cover your children until they become financially independent, and until you've built a nest egg large enough to cover your spouse through retirement.

Open twin 529 college savings plans

Sooner than you think, you may have two kids starting college at the same time. Get a head start on double college tuition costs by investing in 529 college savings plans for each child.

A 529 plan lets you make tax-free contributions that your future student can use to pay for tuition, books and other education-related expenses. Each state offers multiple plans to choose from, and most plans include a mix of mutual funds. You can choose a plan that adjusts its asset mix over time or maintains a fixed portfolio.

If you set aside $200 per month over 18 years, assuming a 5% annual return, you'll have $67,000 saved for the twins' college. That's a great head start. To up that balance, ask family members and friends to contribute to the twins' 529 plans instead of buying matching onesies, toys and other gifts.

Manage daycare costs

Within USDA's $25,360 annual twin-spend, it estimates parents spend a little over 25% of that amount on childcare. However, costs vary widely depending on location and the type of care. For example, families spend between $6,605 to more than $20,000 per year on center-based daycare, according to Care.com member data.

Research your options to find a workable, affordable childcare arrangement. Options include:

  • Join a gym that offers daycare. Many offer about two hours of childcare.
  • Hire a part-time nanny. This route is sometimes more affordable than center-based daycare.
  • Look for a daycare center that offers sibling discounts.
  • Talk with your employer(s) about flex time and/or telecommuting options.
  • Check with your employer — child care discount may be part of your benefits package.


Start or build your emergency fund

New parents learn to expect the unexpected, especially when it comes to expenses. One child may fall and need emergency care. Your house might need a new roof. Or you may have planned to breastfeed for as long as possible but now find that you need to use formula (breastfeeding can fail to work out for a variety of reasons). Formula for twins adds about $270 per month, according to conservative estimates.

Start or grow your high-yield savings account balance to help cover surprise expenses. And if you have or can open a Health Savings Account (HSA), make sure to contribute as close to the maximum as possible, as you can apply HSA funds to tax dependents. In 2018, you can contribute $3,450 to an individual account and $6,900 for family accounts.

Don't forget retirement savings

When you're figuring out how to save and invest money for babies-to-be, don't overlook your own retirement savings.

In addition to contributing to your 401(k) or 403(b), consider opening a Roth IRA. You can set aside an extra $5,500 per year ($6,500 for adults age 50 and older) for retirement. While Roth IRA contributions aren't tax-deductible, you're not taxed when you take the money out. In 2018, the AGI phase-out range for taxpayers making contributions to a Roth IRA is $189,000 to $199,000 for married couples filing jointly. For singles and heads of household, the income phase-out range is $120,000 to $135,000.

If you need a backup emergency fund, a Roth can help. You can receive distributions from a Roth without paying an early withdrawal penalty if you're age 59 1/2 or older. You can also take distributions without penalty to cover qualified higher education expenses such as college tuition.


What you can do next

Use this calculator to estimate how much life insurance you'll need to protect your spouse and twins. You can also look into joining a local support group for parents of twins; you may find some of these parents have great financial tips to offer.


Please consult your financial and tax advisors regarding your circumstances.



Heather R. Johnson writes about finance, small business and healthcare from Oakland, California. Her work has appeared in the San Francisco Chronicle and Houston Chronicle, and with brands such as Bank of America, Wells Fargo and RE/MAX, among others.


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