Raphael Stevens

Life Changes

Raising a child is often more expensive than parents expect, according to financial advisors.
The average middle-income married couple spends $12,350 to $13,900 a year to do so, the U.S. Department of Agriculture estimates.
Here are some top financial considerations for new and expecting parents, from budgeting to college savings and insurance.

AJ_Watt | E+ | Getty Images

There are a lot of “firsts” for new parents — and measures to shore up household finances are among them.
Expenses for a new baby are often higher than parents expect, according to financial advisors.

The average middle-income married couple spends $12,350 to $13,900 a year to raise a child, according to most recent estimates published by the U.S. Department of Agriculture. (The data, for a 2015 birth, includes costs like housing, food, child care and health care. It doesn’t include pregnancy or college costs.)
But there are important factors beyond everyday costs, too. Here are some top considerations for new and expecting parents.

Finetune your budget

Budgeting might seem like an obvious necessity.
But managing cash flow goes beyond saving for big upfront costs like medical bills for hospital stays, clothes, nursery furniture and baby gear, according to Eric Roberge, a certified financial planner and founder of Beyond Your Hammock in Boston.
“While it is smart to save in advance for these expenses, you also need to consider the fact that having kids introduces more ongoing fixed costs into your normal spending,” Roberge said.

More from Life Changes:Drop in U.S. birth rates amid Covid-19 could have lasting economic impactStudent loans forgiven? Here’s what to do next with your cashStruggling student loan borrowers may miss out on big part of child tax credit
Such costs may include baby formula, bottles, diapers and wipes, for example. Parents should weigh these fixed expenses alongside others that may also arise, like a higher monthly rent or mortgage for a larger living space, Roberge added.
Expecting parents should also cut back on unnecessary expenses, and save or pay down debt (like credit cards, car loans and student loans) aggressively before the baby arrives to free up wiggle room in their budget, according to Sophia Bera, CFP, founder of Gen Y Planning in Austin, Texas.
Parents should also determine how their health plan covers birth costs and what they may need to be paid out of pocket, Bera said. Further, they should review their maternity and paternity leave benefits, and determine how to optimize them. (For example, should each parent use the benefits at the same time or stagger them? Will parents need, and be able to afford, extra, unpaid time off?)

Buy life insurance

Nitat Termmee | Moment | Getty Images

Life insurance offers financial protection for a new child in the event of a parent’s untimely death (and associated loss of income).
Financial advisors recommend buying it before the baby arrives, if possible. Term insurance, which lasts for a specified period, is typically easiest and cheapest and has a fixed premium.
A 20- or 30-year policy is appropriate for most families, to cover children through high school or college to legal adulthood, advisors said.
Parents should buy enough insurance to cover 10 to 15 times their current income, according to CFP Stacy Francis, president and chief executive of Francis Financial in New York.

For example, someone earning $100,000 would buy a policy with a $1 million to $1.5 million death benefit. (The premiums may amount to less than $1,000 a year for someone in their 30s, depending on health and amount, Francis said.)
One important consideration: Families may wish to get additional insurance on a stay-at-home parent who doesn’t earn an income, since the surviving spouse would likely incur higher costs via child care, for example, Francis said.
Another factor: It’s worth exploring insurance offered through an employer, which is typically cheaper than private insurance, but it’s not always possible or inexpensive for a parent to take the policy with them if they leave the job, Roberge said.

Start a college savings plan

JGI | Jamie Grill | Blend Images | Getty Images

A 529 college savings plan is a tax-advantaged investment account. Think of it like a 401(k) plan, but for education instead of retirement savings.
529 contributions and investment earnings can be used for qualified expenses like college tuition, fees, books, and room and board.
There are many available options, but parents can consult a resource like SavingforCollege.com, which consolidates information on state-sponsored plans, Bera said.
It’s tough to know exactly what college will cost and how much to save. But the most important thing is for parents to start as soon as possible so the money has more time to grow, Bera said. Parents can start with $1,000 up front and then $100 or $200 a month afterward, she said.

“That compound interest really goes far,” Bera said.
Parents can also request contributions to a 529 in lieu of physical gifts for a child, Roberge said.
Putting 100% of one’s college-savings budget into a 529 may not be the best approach for all families, he cautioned. For flexibility, some clients put half their college-savings budget in a 529; they put the rest in a taxable brokerage account or fund remaining college costs from cash flow in the future, he said. (That’s because parents may face penalties if they need to withdraw 529 savings for anything other than qualified education costs.)

Fund other accounts

damircudic | E+ | Getty Images

New parents should weigh funding other tax-advantaged accounts, like flexible spending accounts and dependent daycare FSAs, offered through the workplace, advisors said.
FSA contributions are pre-tax savings that cover out-of-pocket medical costs like copayments, deductibles and some drugs — which are likely to rise due to more frequent doctor visits. Dependent care FSAs cover costs like daycare, summer day camp, and before- or after-school programs.
Parents can sign up for these benefits during their employer’s annual open-enrollment period. There’s a cap on annual contributions and employers may not offer the benefits.
Here’s an example of the tax savings, provided by benefits firm HealthEquity. Let’s say a family has a 30% effective tax rate, $300 a month in daycare costs, $50 a month in after-school programs, and a $500 summer camp. This family would save $1,350 a year in taxes by paying for the costs with a dependent care FSA.

Update your will

Parents should also update their wills, advisors said.
This step will ensure parents’ money and other assets go to a child in the event they pass away unexpectedly, and that the child is cared for by a trusted and willing guardian, Francis said.
Parents should also update beneficiaries on investment and other accounts, she said. More

Take a look at some of the biggest movers in the premarket:
Zillow (Z) – Zillow slid 6.4% in premarket trading, following a Bloomberg report that the company has temporarily stopped its home-buying service due to overwhelming demand.

Revance Therapeutics (RVNC) – Revance shares plunged 33.2% in the premarket after the Food and Drug Administration declined to approve an injectable treatment for facial lines, noting deficiencies following the FDA’s inspection of manufacturing facilities. The company said no other concerns were raised in the FDA’s response. The treatment is seen as a possible competitor to the best-selling treatment Botox.
Walt Disney (DIS) – Disney lost 1.8% in the premarket after Barclays downgraded the stock to “equal weight” from “overweight,” citing concerns about a significant slowdown in growth for the Disney+ streaming service.
Albertsons (ACI) – The supermarket operator earned 64 cents per share for its latest quarter, beating the 45 cents a share consensus estimate. Revenue also topped Wall Street forecasts. Albertsons increased its quarterly dividend by 20% to 12 cents per share. Its shares jumped 3.6% in premarket action.
Netflix (NFLX) – Netflix estimates the value of its hit series “Squid Game” at nearly $900 million, according to an internal document seen by Bloomberg. The series cost just $21.4 million to produce.
Philips (PHG) – Philips reported lower-than-expected sales for the third quarter, and the Dutch medical technology company lowered its sales and profit outlook for the full year. Philips is taking a hard hit from a respirator recall and a global shortage of electronic components. Its shares fell 2.1% in the premarket.

Stellantis (STLA) – Stellantis is forming a joint venture with South Korean battery maker LG Energy Solution to produce batteries and components for the North American market. The batteries will be produced at the automaker’s plants in the U.S., Canada and Mexico. Stellantis shares slid 1% in premarket trading.
Goldman Sachs (GS) – Goldman received approval from China regulators to take full ownership of a local securities unit. Goldman did not disclose how much it paid for the 49% it did not own in the business that it has co-owned since 2004.
Biogen (BIIB) – The drugmaker said a late-stage trial of an experiment ALS treatment did not reach its primary goal, but noted favorable trends in other measures of progress toward treating the fatal disease. Its shares lost 1% in premarket action.
Southwest Airlines (LUV) – Southwest asked a federal court to reject an effort by its pilots to block the airline from enforcing a Covid vaccine mandate. The pilots union said Southwest changed work rules unilaterally without negotiating first.
NetApp (NTAP) – NetApp was downgraded to “sell” from “neutral” at Goldman Sachs, which cites the 2022 IT spending environment. It also cut its price target for the cloud computing company’s stock to $81 per share from $85. NetApp shares fell 2.2% in premarket trading.

WATCH LIVEWATCH IN THE APP More

The Sustainable Future Forum Europe session on Monday focused on responsibility and regulation.
The way in which we achieve a sustainable future is everyone’s responsibility. From big business regulation and government targets to SME initiatives and personal consumer choices. We are all now environmental activists, but the way we engage with the issue is always unique.

CNBC breaks down the demographics of change and the laws and regulations that can guide it.
The lineup for Monday’s session is below, and click here for the full schedule of the week.

Fireside: How you can profit by fixing the world’s problems6:30 p.m. SGT/HK | 11:30 a.m. BST
Paul Polman, co-founder and chair of Imagine.
Climate change and inequality — and other profound shifts like pandemics, resource pressures, and shrinking biodiversity — threaten our very existence. Government cannot tackle this alone and business must step up. So says former Unilever boss Paul Polman in his seminal book, “A Net Positive,” co-written with sustainable business guru Andrew Winston. They reveal for the first time key lessons from Unilever and pioneering companies around the world on how you can profit by fixing the world’s problems, not creating them. To thrive today and tomorrow, they argue, companies must become “net positive” — giving more to the world than they take.
Add to calendar

Subscribe to CNBC International on YouTube.  More

Gross domestic product grew 4.9% in the third quarter from a year ago, the National Bureau of Statistics said Monday. That missed expectations for a 5.2% expansion, according to analysts polled by Reuters.
Industrial production rose by 3.1% in September, below the 4.5% expected by Reuters. 
“Since entering the third quarter, domestic and overseas risks and challenges have increased,” Fu Linghui, spokesperson for the National Bureau of Statistics, said at a press conference Monday in Mandarin, according to a CNBC translation.

Aerial view of coal being unloaded from a cargo ship at Lianyungang port on Oct. 14, 2021 in Lianyungang, Jiangsu Province of China.
Wang Jianmin | Visual China Group | Getty Images

BEIJING — China’s third-quarter GDP grew a disappointing 4.9% as industrial activity rose less than expected in September.
The National Bureau of Statistics said Monday that gross domestic product grew 4.9% in the third quarter from a year ago. That missed expectations for a 5.2% expansion, according to analysts polled by Reuters.

Industrial production rose by 3.1% in September, below the 4.5% expected by Reuters. 
“Since entering the third quarter, domestic and overseas risks and challenges have increased,” Fu Linghui, spokesperson for the National Bureau of Statistics, said at a press conference Monday in Mandarin, according to a CNBC translation.

The power shortage had a “certain impact” on normal production, Fu said, but he added that the economic impact “is controllable.”
Many factories had to stop production in late September as a surge in the price of coal and a shortage of electricity prompted local authorities to abruptly cut off power. The central government has since emphasized it will boost coal supply and ensure the availability of electricity.
Monday’s data release also showed businesses were less keen to put money into future projects.

Real estate worries

Fixed asset investment for the first three quarters of the year came in weaker than expected, data from the National Bureau of Statistics showed. It was up 7.3% from a year ago compared to the expected 7.9% figure.
“Investment activities have been subdued as a result of the tight credit conditions,” said Chaoping Zhu, global market strategist at J.P. Morgan Asset Management.
Zhu estimated that fixed asset investment declined by 2.5% in September from a year ago, primarily dragged down by a 3.5% drop in real estate investment.

Real estate and related industries account for about a quarter of China’s GDP, according to Moody’s estimates. In the last 18 months, Beijing has increased its efforts to reduce developers’ reliance on debt.
The struggles of giant developer Evergrande came to the forefront in August, when the company warned of default and subsequently missed payments to investors in its offshore U.S. dollar-denominated debt. China’s central bank said Friday that Evergrande is a unique case and that most developers had stable operations.

On Monday, the statistics bureau’s Fu noted there was a slowdown in the contribution of the real estate sector to the economy in the third quarter.
But he maintained that the impact to overall growth was limited.
The latest data showed consumer spending held up, despite pockets of coronavirus-related restrictions, and a fourth-straight monthly decline in auto sales.
Retail sales beat expectations, rising 4.4% in September from a year ago. The Reuters poll had predicted 3.3% growth.
The urban unemployment rate in September was 4.9%. However, that for those aged 16 to 24 remained far higher, at 14.6%.

China’s growth outlook

Read more about China from CNBC Pro

“On the regulation side, we think the authorities will better manage the pace and intensity of the regulatory campaign in order to complete major economic and social development targets set for this year and the next 5-10 years,” he said. “Officials can better communicate with the market about the motives behind the regulatory push and telegraph future regulatory hotspots, in our view.”
— CNBC’s Yen Nee Lee contributed to this report.

WATCH LIVEWATCH IN THE APP More

The Sustainable Future Forum Asia session on Monday focused on responsibility and regulation.
The way in which we achieve a sustainable future is everyone’s responsibility. From big business regulation and government targets to SME initiatives and personal consumer choices. We are all now environmental activists, but the way we engage with the issue is always unique.

CNBC breaks down the demographics of change and the laws and regulations that can guide it.
The lineup for Monday’s sessions are below, and click here for the full schedule of the week.

Fireside: The role of capital markets in the green transition2 p.m. SGT/HK | 7 a.m. BST 
Laura Cha, chairman of HKEX.
Capital markets can play a vital role in providing an efficient and regulated trading platform for sustainable investing. We’ll hear from HKEX Chairman Laura Cha, an active champion of HKEX’s commitment to sustainability, on what they are doing to promote green finance and what part regulation plays in the region’s transition to a more sustainable finance ecosystem. 
Add to calendar

Fireside: The existential threat of climate change to island nations2:15 p.m. SGT/HK | 7:15 a.m. BST 
Aminath Shauna, Maldives’ minister of environment, climate change and technology.
Rising sea levels and the flooding caused by climate change threaten the existence of island nations like the Maldives. 80% of its islands are less than a meter above sea level and 90% of them have reported flooding. Aminath Shauna, the Maldives’ minister of environment, climate change and technology says the Maldives could disappear by the end of the century. She joins us to talk about persuading the world to act quickly to tackle climate change and how some smaller countries like the Maldives are leading the way.

Fireside: How you can profit by fixing the world’s problems6:30 p.m. SGT/HK | 11:30 a.m. BST
Paul Polman, co-founder and chair of Imagine.
Climate change and inequality — and other profound shifts like pandemics, resource pressures, and shrinking biodiversity — threaten our very existence. Government cannot tackle this alone and business must step up. So says former Unilever boss Paul Polman in his seminal book, “A Net Positive,” co-written with sustainable business guru Andrew Winston. They reveal for the first time key lessons from Unilever and pioneering companies around the world on how you can profit by fixing the world’s problems, not creating them. To thrive today and tomorrow, they argue, companies must become “net positive” — giving more to the world than they take.
Add to calendar

Subscribe to CNBC International on YouTube.  More

THERE IS A scene in “Manufactured Landscapes”, a documentary released in 2006, in which Edward Burtynsky, a landscape photographer, seeks permission to take pictures of the black mountains of Chinese coal awaiting shipment in Tianjin, an industrial city near Beijing. “Through his camera lens, through his eyes, it will appear beautiful,” Mr Burtynsky’s assistant assures his sceptical host. That turns out to be not quite true. Through the photographer’s lens, the piles of coal have a dark, satanic geometry—not beautiful exactly, but awe-inspiring in their immensity (pictured above).Looking at those photographs, it is hard to imagine China could ever run short of this familiar fuel. But in recent months, the black pyramids have been not quite immense enough. A scarcity of coal, which accounts for almost two-thirds of China’s electricity generation, has contributed to the worst power cuts in a decade. And the electricity outages have, in turn, hurt China’s growth. “Our economy is developing very fast,” Mr Burtynsky’s host tells him, so as to excuse the gloom and dirt in the air. But that is not quite true anymore either.The Chinese economy has been hit by a triple shock, stemming not only from the power cuts but also the pandemic and a property slowdown exacerbated by the financial woes of Evergrande, a developer. Figures published on October 18th showed that the economy’s pace of growth slowed to 4.9% in the third quarter, compared with a year earlier (see chart). Industrial production expanded by only 3.1% year-on-year in September, slower than in any month during the global financial crisis. More than a year and a half after covid-19 first struck, China is reporting growth rates that were unheard of before the pandemic.Consider the energy crunch first. The causes of the coal shortage fall into two categories: structural and incidental. The unlucky contingencies include floods in Henan province in July and in Shanxi this month, which forced some mines to close. In addition, in Inner Mongolia, which accounts for about a quarter of China’s coal output, an investigation into corruption has implicated and hamstrung some of the officials who might previously have approved expansions in coal mining. Shaanxi province, China’s third-largest producer of coal, slowed production to keep the skies clear for a national athletics event in September, which President Xi Jinping attended. And coal expansion has also been inhibited by safety inspectors, who have scrutinised 976 mines, after more than 100 industrial accidents nationwide last year.The deeper reason for the coal crunch is China’s efforts to reduce its dependence on the fuel, which is responsible for countless premature deaths from air pollution and a big share of the country’s carbon emissions. The authorities have been reluctant to approve new mines or the expansion of existing ones in recent years, because “it’s clearly driving the bus in the wrong direction,” says David Fishman of The Lantau Group, an energy consultancy.When supply is tight, prices are supposed to rise, obliging customers to economise on their consumption. But as the price of coal shot up, power stations were unable to pass their higher costs on. The price they could charge the grid company that buys the bulk of their power could only fluctuate up to 10% above a regulated price, which was changed infrequently. And the tariff paid by end-users was based on a provincial catalogue of prices that was similarly inflexible. Some power stations simply stopped operating, refusing to generate power at a loss.Another shock to the economy came from the pandemic. Outbreaks of covid-19, such as a cluster that began in Nanjing in July, prompted strict, localised lockdowns, depressing retail spending, especially catering, and travel. According to Flight Master, a travel site, airlines were operating at less than half their full capacity in August and at only two-thirds of it in September.The final shock was to the country’s property sector, a perennial engine of growth, employment, leverage and anxiety. Regulators are trying to curb speculative demand for flats and limit the excessive borrowing of homebuilders. That effort to limit financial risk has brought some pre-existing dangers to a head. Evergrande, a huge developer with $300bn in liabilities, missed a payment on a dollar bond on September 24th, followed shortly after by Fantasia, a smaller outfit. Some homebuyers are now understandably nervous about handing over their cash to any developer who may not be in business long enough to finish the projects they are selling.Against this backdrop, China’s developers started 13.5% fewer homes this September than they had a year earlier and their sales, measured by floorspace, fell by a similar percentage. As if to illustrate the importance of the property market to various “upstream” industries, China also reported sharp falls in the production of cement (down by 13% in September compared with last year) and steel (which fell by 14.8%).In a press conference on October 15th, China’s central bank described Evergrande as an idiosyncratic case in a generally healthy industry. That should have been reassuring, except that policymakers will not come to the property sector’s rescue until they are sufficiently worried about its plight. Anxiety among regulators may be a necessary condition for alleviating the anxiety of homebuilders and their creditors.Most economists think China’s year-on-year growth will slow even further in the last three months of the year, to 4% or below. China will maintain its vigilance against covid-19, and the property downturn has further to run. But one of the three whammies should at least pack less of a punch in the remainder of the year. China’s power stations, unlike its property developers, have won belated relief from higher authorities. Mines in Inner Mongolia have been ordered to expand production. And China’s principal planning body has announced a long-awaited liberalisation of pricing. It would give power stations greater freedom to pass on higher costs to the grid company and force industrial and commercial customers (although not residential customers or farmers) to pay power prices negotiated in the market, not those set down in a catalogue.These reforms have been in the works for a long time. But it took an acute power crisis to force the issue. Policymakers might once have preferred a “slow, measured roll-out of market reforms”, notes Mr Fishman. But things changed “when the lights started to go out in factories across the country”. China likes to cross rivers by feeling for the stones. But when a stone gives way, it is time to take a leap. More

A bitcoin bull is on pullback watch.
Hedge fund manager Mark Yusko believes investors will take profits due to the cryptocurrency’s sharp rally over the last few weeks.

“There are a lot of people that think we could hit $100,000 by the end of the year. The stock to flow model says we should,” the Morgan Creek Capital Management CEO and CIO told CNBC’s “Trading Nation” on Friday. “I also wouldn’t be surprised of a little consolidation. Look, we’re up 40% this month which is only 15 days old.”
Bitcoin crossed the $60,000 mark for the for the first time since April on Friday. The bullish move came on excitement surrounding progress on bitcoin ETFs.
“We’re excited, obviously, that people are recognizing that approval is likely imminent,” said Yusko, who’s also managing partner of Morgan Creek Digital “We’ve been bullish on cryptocurrency, and bitcoin in particular, for a long time.”
Yet, he’s questioning the latest performance’s sustainability.
“A pause that refreshes given how overbought we are right now wouldn’t surprise me,” said Yusko. “There is some risk of the buy the rumor, sell the news.”

Bitcoin $250,000?

Any profit-taking would be temporary, according to Yusko. His call is for bitcoin to hit $250,000 in five years.
“It’s classic supply and demand. One of the nice things about bitcoin as an asset is it has a finite supply,” he said. “We know every day for the next 140 years how many bitcoin will be minted through the mining process.”
In five years, Yusko estimates bitcoin’s value by market cap will equal gold.
“I believe bitcoin has and is replacing gold. It’s now digital gold,” noted Yusko. “It’s a perfect store value.”
Part of his reasoning surrounds a long-term deflation prediction. It’s a scenario that’s rarely being talked about as the world copes with inflation spikes and a supply chain crisis.
Yusko contends upward prices pressures are a kneejerk reaction to the massive global Covid-19 economic lockdowns.
“The likelihood of us getting a full-on inflationary period, I think, is really, really low,” he said. “Normal is that we are in a deflationary death spiral. It’s been going on for a couple decades.”
He cites an aging population and the impact of massive virus aid measures as major catalysts.
“We have bad demographics, too many people reaching retirement age. We have too much debt,” Yusko said. “That all leads to deflation.”
Disclosure: Yusko owns bitcoin, ethereum, gold and Coinbase shares.
Disclaimer More