Many families wish to extend the warmth of their home to foster children and foreign students. For many, welcoming a new child or student to their family can be rewarding – both for the child and for your family – but the arrangement requires some planning. When considering becoming a foster parent or foster parent, be sure to anticipate the potential financial impacts as well.
First, think about the lifestyle you want to provide for the student. What experiences, family traditions or activities do you want to share with the child? How do you see everyday life with the new addition? The answers to these questions will help you prepare for the impact on your budget.
If you have any experience with raising children, you know how expensive it can be. The situation may be different when dealing with foster children. Most families will be reimbursed for at least some of the costs they incur, including medical and dental care, which is normally paid for by the state. Although it is important to note that the level of reimbursement may vary depending on your state of residence, the age of the child, the number of children placed in your home, and other factors. Be sure to consult the appropriate agency in your state to find out the level of financial support available if you are considering a foster parent role.
Whatever reimbursement you may receive, the reality for many foster families is that child care costs will likely exceed this amount. Factoring this into your financial plan will go a long way in ensuring that you are in a strong position to meet your responsibilities as a foster parent.
Welcoming a foreign student
Welcoming an exchange student is another level of commitment, but it is not without financial impact. Exchange students tend to stay for the duration of their program, which is likely a semester or an academic year. These students are generally older and able to handle day-to-day responsibilities on their own.
In most cases, the student’s program will cover health insurance costs, tuition fees, and extracurricular activities. Additionally, many students will have their own spending money to pay for souvenirs, school meals, entertainment, and other expenses typical for a school-aged child.
Nonetheless, you will want to be in a good financial position to provide a conducive environment for exchange students. They may depend on you for things like transportation to events, as well as living space. If you include them in family activities, it can also increase your expenses. Host families may benefit from a modest tax deduction to help offset some of the costs associated with housing an overseas student. Be sure to consult your tax advisor for more information.
Have your financial house in order
Before you commit to being a foster parent or foster family, you want to be financially prepared. Some of the steps to consider include:
· Increase your emergency fund: Conventional wisdom dictates that you should have three to six months of living expenses set aside in your cash reserve. Having additional children in your care can come with additional unforeseen expenses, so consider having additional funds beyond this norm.
Consider your other financial priorities: As you update your budget to reflect your new addition, make sure you continue to fund your own financial goals, like saving for tuition, paying off your mortgage or your retirement.
Understand the child’s program or financial situation: Know what expenses are covered by the state (for host families) or the program (for exchange students) and update your budget accordingly.
Having your financial situation in order before accepting 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 ready too.