When a child is born, it is usually a most happy occasion. Congratulations are all around.

The birth of a grandchild is equally well received. If all goes well, in the next six months my wife and I will have three new grandchildren. Their births will be the first for two of our children and the second for the other.

Of course, along with children comes the reality of the costs of raising them. Most new parents have no idea of the incredible adventure called parenting or the associated costs. If they did, they might opt out.

The U.S. Department of Agriculture estimates the average nationwide cost of raising one child from cradle to college entrance at age 18 ranges from $143,790 to $289,380, depending on the income of the family. Higher-income families tend to spend more for optional items like camps, clothes, and cars.

Then, when they turn 18, add college expenses, and your financial outlay can get even worse. How much worse?

According to the College Board, for the 2006-07 school year, the average cost of one year at a four-year public college is $16,357, while the average cost of one year at a four-year private college is $33,301. If costs don’t go up — and they have for decades — the total for public schools comes to $65,428 and $133,204 for a private university. Also, many students feel that graduate school is almost mandatory.

The bottom line: Children are expensive! Between raising them and educating them and making sure they get a good strong start in life, one thing is obvious when it comes to children — they are a major responsibility.    

Most parents accept it and as long as they are alive and healthy, they manage to somehow meet these expenses.

If you start saving for college expenses immediately after the birth of the child, it is easier to have the money to pay for college. The miracle of compound interest comes into play. For instance, if you put aside $100 a month and earn a 6 percent after-tax return, your newborn will have nearly $39,000 at age 18. Of course, with inflation, that may only cover one year of college in 18 years. If you procrastinate and wait until age 10 to start saving, the $100 per month will be only worth $12,283 at age 18.

The message is to start soon and put away as much as possible. Eighteen years seems like a long time, but it has a way of flying.

Also, what if you don’t live? Life insurance becomes a must buy for new parents. Granted, it is quite rare for young parents to die, but it does happen. There might be some Social Security benefits, but it is never enough to pay all the costs mentioned above. After the birth of a baby, it is a perfect time to meet with your insurance agent to review existing coverages and estimate any shortfall.

Also, death of one or both parents is devastating, but the permanent disability of one or both is equally overwhelming, especially if children are around. The long-term loss of income can wipe out savings, plans for home ownership, college and other important financial goals. Do a review of disability insurance too.  Disability may be more likely than death.

Enjoy watching your children grow up. And remember, just as they are important to you, you are important to them. 

Notable Quote: “People who say they sleep like a baby usually don’t have one.” Leo J. Burke.

Tom is a Registered Investment Advisor and Certified Financial Planner®. If you have questions or topics, call or write Tom at 1030 Seminary St. Suite D, Napa 94559, 254-0155, fax 254-0158 or e-mail suntrm@aol.com