By Bennett Whitlock, CRPC®, Private Wealth Advisor
If you are considering becoming a foster or host parent, make sure you also anticipate the potential financial impacts.
Most families will be reimbursed for at least some of the costs that they incur, including medical and dental care, which is normally paid for by the state. However, it is important to note that the level of reimbursement can vary depending on your state of residence, the age of the child, the number of foster children in your home and other factors. Consult with the appropriate agency to find out the level of financial support available.
Hosting a foreign exchange student
Hosting an exchange student is a different level of commitment, but it is not without financial impact. Exchange students tend to stay for the length of their program, which is likely a semester or a school year. These students are generally older and able to manage daily responsibilities on their own. In most cases, the student’s program will provide for the cost of health insurance, school fees and extracurricular activities. Additionally, many students will have their own spending money.
They may be reliant on you for necessities like transportation to events as well as living space. If you include them in family activities, that may also add to your expenses. Host families may qualify for a modest tax deduction related to housing a foreign exchange student. Be sure to consult with your tax advisor.
Having your financial house in order
Before you commit, you want to be prepared from a financial perspective. Some of the steps to consider include:
- Expanding your emergency fund. The conventional wisdom is that you should have three-to-six months’ worth of living expenses set aside in your cash reserve. Having additional children in your care may mean additional unexpected expenses, so consider having extra funds available.
- Keeping up with your other financial priorities. As you update your budget, continue to fund your own financial goals.
- Understanding the child’s program and/or financial situation. Know what costs are covered by the state (for foster care) or the program (for exchange students) and update your budget.
Having your financial house in order before taking on a foster child or exchange student will help you create a more positive experience. If your home and family are ready, make sure your finances are as well.
Bennett Whitlock, CRPC ®, is a private wealth advisor and managing director with Whitlock Wealth Management, a franchise of Ameriprise Financial Services, Inc. Learn more at WhitlockWealth.com or call 703-492-7732.