Many families have a desire to extend the warmth of their home to foster children and foreign exchange students. For many, welcoming a new child or student into their family can be rewarding, both for the child and her family; however, the arrangement requires some planning. When considering becoming a foster 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 imagine everyday life with the new addition? The answers to these questions will help you prepare for the impact on your budget.
foster care
If you already have experience raising children, you know how expensive it can be. The situation may be different when caring for foster children. Most families will be reimbursed for at least part of the costs they incur, including medical and dental care, which are normally paid for by the state. It’s important to note, though, that the level of reimbursement may vary based on your state of residence, the age of the child, the number of foster children in your household, and other factors. Be sure to check with the appropriate agency in your state to find out the level of financial support available if you are considering a foster parent role.
Regardless of the reimbursement you may receive, the reality for many foster families is that the costs of care are likely to exceed that amount. Accounting for this in your financial plan will go a long way to making sure you are in a strong position to meet your responsibilities as a foster parent.
Hosting a foreign exchange student
Hosting an exchange student is a different level of commitment, but it is not without a financial impact. Exchange students tend to stay for the duration of their program, which is likely to be a semester or a school year. These students are generally older and capable of handling daily responsibilities on their own.
In most cases, the student’s program will cover the cost of health insurance, school fees, and extracurricular activities. In addition, many students will have their own spending money for souvenirs, school lunches, entertainment, and other typical school-age expenses.
However, you will want to be in a strong financial position to provide the right environment for exchange students. They may connect with you for things like transportation to events, as well as living space. Including them in family activities can add to your expenses, too. Host families may qualify for a modest tax deduction to help offset some of the costs associated with hosting a foreign exchange student. Be sure to check with your tax advisor for more information.
Get your financial house in order
Before you commit to becoming a foster parent or host family, you need to be prepared from a financial perspective. Some of the steps to consider include:
Expanding your emergency fund: 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 additional funds available beyond this standard.
· Keeping up with your other financial priorities: As you update your budget to reflect your new addition, be sure to continue funding your own financial goals, such as saving for education costs, paying your home mortgage, or retirement.
· Understand the child’s program or financial situation: Know what costs are covered by the state (for foster homes) or the program (for exchange students) and update your budget accordingly.
Getting your financial house in order before accepting a foster child or exchange student will help create a more positive experience. If your home and family are ready, make sure your finances are too.
