5 Things Having a Baby Taught Me About Money

A new mom and personal finance expert shares the new money lessons she learned from baby.

While I’ve always been pretty financially conscious (you don’t become a personal finance writer by not caring about these kinds of things), it wasn’t really until I had a kid that I started putting some of the financial advice I’ve always heard into practice. Plus, I picked up plenty of new tips.

Here are five of the biggest things I learned about my finances after I had a baby. They don’t only apply to people with kids, though. In fact, I wish I’d taken some of them into consideration a little bit sooner.

1. Sometimes it’s OK to Spend Money to Save Time … or Your Sanity

While I’d never advocate for frivolous spending, I’ve learned that sometimes it’s OK to spend a little bit extra on something that will either help save time or make your life just a little bit easier. In my Mom Life, that has taken on all kinds of forms: From big-ticket items like forking over the cash for a nanny (as a freelancer I could just as easily be stingy and try to fit all my work into nap times, nights when my husband gets home or the weekends, but why make it so hard?) to deciding to finish our basement (a large chunk of cash upfront, yes, but with all the visitors we have coming to see the baby, and all the toys that are steadily taking over the house, this is a sanity saver for sure) to the small — and sometimes silly — but necessary, like investing in travel covers for our stroller and car seat so they don’t get ruined when they’re chucked carelessly under planes.

2. Time Really Does Fly, so Start Saving for Retirement Today

It’s pretty easy to get caught up in the day-to-day minutia when you have a tiny baby that depends on you for her every want and need. But every now and then, when I get five seconds to myself, I’m able to look back through the photos on my phone and see how much my daughter has grown. Can she honestly be six months already? You’re probably saying, “I already know time goes quickly. It’s been [insert amount of time here] since I graduated from college,” but really, there’s nothing that sets up a ticking clock quite like a quickly growing child. My point is, although I have always kept the mantra “the earlier you can start saving for retirement, the better,” tucked somewhere in the back of my mind, I now fully grasp the truth behind it.

For example, my daughter was born in July 2016. Had I invested just $100 on that day into a retirement account, by the time I’m potentially ready to retire in 30+ years, that measly $100 could grow to more than $900. Now imagine I invested more than $100, and did so every single month instead of once? Behold, the power of compound interest.

3. Things Change, so it’s Important to Revisit Budgets & Goals

Having a child would be an obvious change to anyone’s budget, but for me, becoming a parent just reinforced how important it is to not only have a budget and savings goals, but that it’s equally as important to revisit those things on a fairly routine basis. Before I was married, for example, my savings goals consisted of essentially two buckets: Emergency and travel. (Ah, the good ol’ days.) When I got married they became: Emergency, travel, move/house. When we started thinking about kids, a fourth “baby” bucket was added. You get the picture. Since buying a house, we’ve added “home repairs” to that list, too, and believe me when I say we’ve already tapped into that one mightily.

The beginning of the year is a great time to check in on your current budget and savings goals and update as needed, but don’t be afraid to shift things around as often as you need to remain comfortable.

4. Finding What Makes You Most Productive Will Be to Your Advantage

I’ve always considered myself an organized person, but I really kicked it into high gear when my daughter was born, and that’s helped my career as well. As I planned to re-enter the workforce after taking a couple months off when my daughter was born, we didn’t yet have a nanny, but I wasn’t willing to wait to get started. Enter the key to my success: organization. As a working mom without a nanny — and then even when we did find one — I realized quickly that if I was going to get anything (let alone everything) done that I wanted to in a day, I better have a plan. For some people (ahem, me) that might mean making daily to-do lists where items can be crossed off. Others might find reminders set for specific times of day helpful, or setting calendar appointments.

The point is, most of us need a little help keeping on task throughout any given day, whether it’s with personal or professional goals. Learning the things that will get you moving more quickly and efficiently will help you power through your to-do list and streamline your day. Remember: Time is money, so make the most of yours.

5. It’s OK to Use Your Savings for What You’ve Saved For

I’ve always felt more secure when I had savings in the bank, which at times has meant going without things I could have really used, even if they were the exact things I was actually saving for in the first place. Silly, I know, but once I was able to start putting money into savings I loved to watch it grow — and I equally hated to watch it dwindle.

Fast forward a couple years and some of those savings buckets have to be spent — hello mortgage down payments, health insurance deductibles to give birth and any number of house repairs. These days it seems like I don’t have the option of whether to spend money in my savings … for the good of my family, money must be spent. And that’s OK. The whole point of saving up for something in the first place is so that when the time comes to actually purchase the item — whether it’s a house, a vacation or that really extravagant computer bag you’ve had your eye on — you’ve done your due diligence and can buy it outright, rather than go into credit card debt over it (and, if you already have, you can find tips for getting rid of those balances here). Coming to grips with this earlier could have saved me a lot of unwarranted angst.

Of course everyone is different when it comes to money management, but hopefully at least a few of the revelations I’ve had about finances over the past six months might be able to help you out, as well.

For more money lessons, visit Credit.com’s personal finance learning center.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: SolStock

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Help! I Don’t Trust My Son With My Money

don't-trust-my-son-with-money

Q. I don’t trust my older son with money. My younger one is fine. Is it unfair to put restrictions on the inheritance the older one gets eventually? I’m 70.
— Trying to plan

A. You’re not alone.

Many parents face the same dilemma, and not all people are good with money.

“Some children, regardless of age, need help managing their finances,” said Mary Scrupski, the director of estate planning with Prestige Wealth Management Group in Flemington and Millburn. “Also, sometimes children who are generally good with money make mistakes if they inherit a large sum of money all at once.”

If your gut is telling you that your older son needs restrictions, then it might be a good idea to investigate your options, Scrupski said.

Whether it is “unfair” really depends on your point of view.

“If you do it to protect him from himself, then there is nothing `unfair’ about it,” she said. “You might be actually helping him rather than treating him unfairly.”

Scrupski said if you are concerned about a child’s ability to handle an inheritance, you can always leave their inheritance in trust for their benefit.

If you decide to do this, you will need to name someone as trustee.

“You might not want to name your younger son as trustee for his older brother even if he is better at financial affairs,” Scrupski said. “This might cause family friction even under the best circumstances.”

Instead, you could name a trusted family friend or advisor as trustee. Also, there are financial institutions that provide trust services, she said.

Scrupski said the terms of the trust can be tailored to your older son’s needs.

“For example, you could write a trust that gives your son a fixed percentage of the assets each year,” she said. “That way, there would not be much discretion on the part of the trustee whether or not to make a distribution.”

Alternatively, Scrupski said, you could leave it up to the trustee to decide the amount and timing of distributions.

“Trusts are very flexible vehicles and can provide protection for beneficiaries who are unable to manage finances,” she said.

Image: kristian sekulic

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How Can I Get My Aging Parents to Talk About Money?

aging-parents

Q. My parents are 70 and 72 and they are of sound mind. But they never want to talk about their finances, and I want to make sure they have enough because I can afford to help if they need it. How can I get them to talk?

— Stumped

A. Lots of people don’t like to talk about their finances.

It can be especially difficult with seniors because the conversation is often about more than just money.

Speaking about money with family makes some seniors very uncomfortable, said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton, New Jersey.

And if you have siblings, asking about your parents’ about money could create a situation where someone feels you’re trying to trying to control and take your parents’ money, he said.

“This can create family issues that will never go away,” Lynch said.

To avoid that, if possible, bring in help from the outside. A financial planner, estate attorney or Certified Public Account can be more objective and less threatening, Lynch said.

He recommends you go easy and if you have siblings, include them.

“Nobody likes admitting they are getting older — including myself — but it is important to start the conversation,” Lynch said. “See if your siblings can help. Having a consistent approach from the family really helps.”

Lynch recommends you start the conversation gently.

“I would throw out something like this: ‘Mom and Dad, I am very fortunate where if you need my help in the future, I can help. I just want to know if I should keep this money available for you,’” Lynch said.

Depending on how that goes, you may want to ask them about legal documents, he said.

“Don’t start with the will. Start with the medical power of attorney, which they both need to authorize medical care for each other,” Lynch said. “Starting with the will seems like you are looking for their money.”

If they have medical power of attorney, find out who they’ve chosen as the backups to make decisions on their behalves.

If your parents don’t have legal documents, this conversation is a great opportunity to have them meet with a very good estate attorney who will bring up these issues to them in a much more objective way.

“A good estate attorney is a full-time estate attorney, not a real estate/general practice attorney that can also do wills,” Lynch said. “Generally full-time estate attorneys will focus on tax, estate and elder care law and will ask great questions. Those questions will help you better help your parents.”

[Editor’s Note: It’s a good idea to get your free annual credit reports every year so you can make sure there are no surprise debts that might impact your family. You can also get a free credit report summary every month on Credit.com to see where you stand.]

Image: PeopleImages

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