I’m an Aunt! Now I Just Have to Budget for It

I’ve recently taken on an exciting new title: Auntie Julia. 

Late last year, my sister gave birth to a baby boy—the first grandchild to enter my big, boisterous family—and my other siblings and I traveled to be together for the birth. We all helped out as much as we could: stocking the fridge with Tupperware meals, changing diapers or offering to babysit for a few hours so the new parents could get some sleep. 

I’m thrilled to be entering my auntie era. And speaking with other new aunts and uncles my age, I realized a lot of us share similar excitements about how we plan to celebrate birthdays, graduations and other joyous milestones to come. I know my girlfriend and I don’t want to have children right now—or maybe ever—and so embracing my sister’s child and showing up for their growing family is even more important to me. 

At the same time, I’ve also been contemplating the money questions that accompany this new stage of life. Things like: How much should I budget for travel, given that I’ll want to be there in person for many of these special moments? Should I be financially contributing to the baby’s future education? And how can my siblings and I best support the new parents as they set money goals for their expanding household? 

Juggling these considerations can be especially confusing for young adults, many of whom are still trying to establish their own professional lives as they shore up their personal savings. I know I’m not the only one with a number of money goals—saving for my first home, investing in my fledgling freelance business—that I want to give priority to even as I show up for my family. Balancing everything may be tricky, but we new aunts and uncles are willing to make it work. 

Toys, travel and tips

Danielle Arlotta, adviser and certified financial planner at Brooklyn Plans, became a new aunt last year and says she has talked about some of these questions with her clients.

Her first piece of advice: Consider just how much wiggle room you have in your own budget. “I always tell people ‘You can’t sacrifice your retirement savings or financial well-being to go over the top,’ ” she says. “But this is an important thing to build into their budget if it’s important to them.” 

Arlotta says she opened up a new savings account when her niece was born to set aside a small amount of money each month for future use, whether it be buying toys or booking travel. Saving any amount of money is helpful, she says, especially if you’re committed to doing so on a regular basis. The important thing is to keep it separate from your personal account so you won’t be tempted to dip in next time you’re short on cash. 

Planning for future baby visits can be trickier, she says, especially if you live far away from family. And that often is the case for young adults, as career opportunities can require moving to another city or state.

“Save for it on a monthly basis,” Arlotta says, “so you’re not throwing your budget out of whack completely when it’s November and you want to visit your nieces and nephews for the holidays—and also buy them gifts.”

Gifting an education

From the moment my sister shared her happy news with me, I knew I had to resist the allure of the toy aisle. My Instagram feed flooded with ads for adorable onesies, must-have parent gear and “imaginative play products” that promise to turn babies into future Einsteins. I had to remind myself that hitting purchase now would only fill my sister’s home with even more well-meaning baby gifts. 

Robert Farrington says that when he and his wife first had their two children, generous friends and relatives overwhelmed his house with boxes of stuff. 

“They were getting 20 or 25 gifts and the children would play with three of them, and then the rest were getting thrown away or donated,” says the founder of the College Investor. “You realize quickly: $20 times 10 gifts that were never touched is $200 that went to waste. And if you do that at the birthday and then at Christmas, it really adds up.”  

So rather than continue to fill up the toy chest, Farrington recommended that his family try something different: donate to a “529” education-savings plan. These tax-advantaged savings plans allow people to contribute to a child’s future education expenses. Contributions grow tax-free and withdrawals won’t be taxed so long as they are used for qualifying educational expenses—though specific rules for plans vary from state to state. 

If I were to open up a 529 for my nephew, I and others—like my siblings, my parents or other family friends—could all join in adding cash to the pot. From there, compound interest works its magic and the money invested grows over time. Some states and different plans will limit lifetime contributions to different amounts, so make sure you read the fine print and discuss it with the parents. 

“We’ve done that for eight or nine years, and our friend group has slowly adopted that as well,” Farrington says. “And let’s not kid ourselves because the children are still getting plenty of gifts—just five now rather than 25.” 

The money in a 529 plan can also be used for education-related expenses beyond tuition, says Robin Patin, financial planner and wealth adviser in San Francisco. She recommends people first check with an accountant to make sure the expense fits the rules of the individual 529 account. 

“A lot of times, it needs to be done in partnership with the parents,” she says. “Because otherwise you’ll end up with a kid with three different 529 accounts, or maybe the grandparents on the dad’s side might be covering all the education, so they don’t need a 529.” 

Inspired by Patin’s advice, I called up my sister to talk about the different ways I could support her, my brother-in-law and their growing family. I shared some of the strategies and resources I’d discovered, including links to a potential 529 plan. 

For now, though, my sister said she most appreciated the kind of support that doesn’t come with a visible price tag. “We’re just surviving right now,” she said with a laugh.

Julia Carpenter is a writer in New York. She can be reached at reports@wsj.com.