Meet 2 Families Who Earn Six Figures and Still Feel Broke

Although they have lived in the Washington, D.C. metro area all their lives, Lauren Orsini and her husband, John, don’t feel they can raise a family there, despite their six-figure income.

Lauren Orsini and her husband, John, live in Arlington, Va., and both grew up in the greater Washington, D.C. metro area. They attended all levels of schooling here, and their families still live close by. But as the couple looks toward a future with children, they don’t see how they can afford to stay in their hometown — even though they bring in more than $100,000 annually.

“The life that I’m living is unsustainable, and I know it,” says Lauren, 30. “But I’m so deeply rooted here. I can’t imagine living anywhere else, even though I know this won’t last forever.”

Their plight is reflected in the findings of a recent MagnifyMoney report, which analyzed the best and worst cities for a family earning six figures. On the list of 381 metro areas, the Washington, D.C.-Arlington-Alexandria, Va., region is dead last.

“I’m not surprised at all,” Lauren says. Though she and John, a government contractor, make just above $100,000 “it doesn’t go far here even though it sounds like a lot. And you can forget about buying a place.”

The couple shells out $1,700 monthly on their one-bedroom apartment, located in a 1960s building with no thermostat or washing machine. But Lauren loves the life that Arlington affords her, particularly its proximity to D.C. proper.

She takes Japanese lessons at the embassy. Her running club recently took a route to the Lincoln Memorial and back. She can hop on the metro to visit either of her two sisters. And she and John have always enjoyed commutes of less than 20 minutes.

“If you don’t live in Arlington, I can understand how outsiders would say, ‘Well, that’s a selfish decision — you can’t have everything,” Lauren admits. “But my world is here. I’m still close with my high school friends. John’s family is 90 minutes away. We can go see a show in D.C. or watch the fireworks in just a few minutes.”

Six-Figure Incomes and Still in the Red

But the convenience and excitement of D.C. life come with hefty costs, as the MagnifyMoney study showed. The analysis — which factored in basic expenses like taxes, housing, and transportation — was designed to see where a family earning $100,000 has the most wiggle room. The estimates assume a two-income household with two adults and one child, and cities are ranked by worst (least amount of money left over at the end of each month) to best (the most amount of money left over at the end of the month).

After the D.C. area, rounding out the bottom three are Bridgeport-Stamford-Norwalk, Conn., and San Jose-Sunnyvale-Santa Clara, Calif. By contrast, Tennessee is clearly the best state for six-figure households to stretch their dollars: Johnson City, Morristown, and Cleveland are the top three cities on MagnifyMoney’s list.

The differences are stark. In Johnson City, Tenn., total monthly expenses make up just 62% of total post-tax income, leaving a $2,400 surplus. In the D.C. area, expenses come to 105% monthly — meaning households making $100,000 are $315 in the red on average at the end of the month.

“We’re doing just fine for now, but when I think about a baby and buying a house, it’s not going to work,” Lauren says. “I check Redfin every day, as if some magical condo is going to spring up. We go through this cycle of house-hunting where we lower our standards more and more, and we still can’t find anything.”

Lauren and John have found homes they think they can afford: two bedrooms, maybe 980 square feet or so, for about $650,000. But these are often condos and townhouses with high homeowners association fees, which puts the homes far above budget.

It’s frustrating. And it’s why Lauren has seen friends, one by one, scuttle out to the suburbs in search of slightly more affordable real estate and space for a family. But as with the city, the ‘burbs come with a cost: a commute to D.C. of an hour or more. Lauren fears that would be untenable for John.

She wants to see her husband stay happy at his job, where he has worked for seven years. John is also slated for a promotion soon, which could help ease some of their worries. But Lauren doesn’t expect any windfall to solve the deeper barriers of raising a child in her hometown.

“We make six figures, we responsibly put money in savings and retirement, and it’s not enough,” Lauren says with a sigh. “What I think will happen is that we won’t be able to delay having a baby any longer, and life will become about what’s best for them. But for now, it’s hard to swallow any decision that will make our lifestyle worse.”

Finding the Free in Pricey Places

D.C.-area residents like Lauren and John — and city-dwellers all over the nation — are willing to pay sky-high rents because of all that cities have to offer. While some of those offerings are trendy restaurants and pricey shows, cities are also home to loads of free fun like museums, festivals, and block parties.

That’s part of why Shanon Lee, a mother of four living in D.C.-adjacent Alexandria, Va., isn’t “really feeling the crunch with my family. It’s easy to spend money [in the D.C area], of course, but it’s also easy not to, thanks to all of these events.”

Beyond free events for her kids — who range in ange from 4 to 21 — Shanon herself also scores frequent invitations to outings in her role as a filmmaker, artist, and writer. What’s more, Shanon’s live-in partner works in IT, and he can easily pick up side jobs like refurbishing computers.

“I know we’re lucky that we’re doing well, and he can make $2,000 in a heartbeat by grabbing a quick job if he wants,” Shanon says. “But lots of people I know are living with roommates even when they don’t want to. And in our last neighborhood, a bunch of families packed in grandparents too.”

Still, Shanon says she and her family are “always looking for ways to reduce our expenses.” She opted not to enroll her youngest in a preschool that would have cost $380 weekly, instead balancing her work-at-home life with caring for her child. The family currently pays $2,600 monthly to rent their townhome in Alexandria, though they’re looking to move a few blocks away where homes can rent for $1,900. After that? Unlike Lauren Orsini, Shanon doesn’t feel tied to the D.C. metro.

“It’s a transient area, and I’ve found it can be hard to form lasting relationships,” Shanon explains. “We don’t necessarily feel at home.”

Shanon isn’t sure where her family’s forever home will be, but she plans to choose a spot based on the basics.

“Our primary considerations are factors like cost of living, safety, and good school districts,” Shanon says. “You have to stay focused on the important things.”

The post Meet 2 Families Who Earn Six Figures and Still Feel Broke appeared first on MagnifyMoney.

Now’s the Time to Talk Online Security With Your Children

Whether you’re a helicopter parent or more laissez-faire, we have some words of wisdom to offer.

Summer’s here and the time is right for getting hacked or worse, having the contents of your computer held hostage by ransomware. For a couple of carefree and extreme data-consuming months, kids everywhere will be doing whatever they want online even if you’ve tried to control them.

In other words, be very afraid.

Only you know if it is time to have “the talk” with your child about online security. But before you sheepishly clear your throat in their doorway, have you had the talk with yourself?

No amount of whistling in the dark will keep you safe from the crazed clicking of an unthinking child. It’s crucial to remember that safe online habits aren’t an innate skill; they need to be taught. That said, there are many parenting styles when it comes to all things online. Some parents choose to be hands-off about it, and if that’s working for you, more power to you.

Actually, I take that back. There are countless pitfalls, pratfalls and worse awaiting your child — and with that your entire family — as well as anyone else unlucky enough to be connected to your home network.

Whether you’re a helicopter parent or more laissez-faire, we have some words of wisdom to offer. Here are four subjects to broach when talking online security with your children.

1. Stay Alert

Online security and threats threats are fluid. You can be completely on top of your game one day and get hacked the next because you aren’t prepared. The goal should be to become security-minded. While it helps to know about the most recent exploits and threats, it’s better to get into the mindset of those old Highlights Magazine exercises and think, “What’s wrong with this picture?” The moment you think you’ve got everything under control, you become an easier target. Stay alert. (If you believe you’ve been the victim of identity theft, don’t shrug it off. You can view two of your credit scores for free on Credit.com.)

2. Use Better Passwords

Increasingly, people are turning to password managers to keep their accounts safe, since it can be difficult to remember a large number of long and strong passwords. These managers generate random passwords and allow you to manage the process with a single master password. If you are not using a manager, make sure everyone in the house is using sufficiently complex passwords that are unique to the key accounts in your home, and never let your kids use any of your passwords!

3. Monitor Them

No one likes the specter of Big Brother, but your kids aren’t your siblings, they are your wards. While many advocates of internet privacy will say that a child’s travels online should be protected, even from parents, I think of monitoring online behavior in the same way I do a trip to the pediatrician — it’s my duty as a parent to know and protect all of my child’s sensitive personal information.

The same goes for internet history and app usage. You need to know what they’re doing. While bullying, compromising pictures and other activities you may find could make a different conversation necessary, your job is online safety.

4. Establish Ground Rules

The best way to keep your family safe from the wandering clicks of a child is to start teaching a secure mindset right away. Tell them to look for secure HTML, which can be found in the URL of your browser, where you will see a padlock symbol or the letters HTTPS (instead of HTTP) or both.

Have rules about app shopping. Encourage your kid to check with you if they are unsure about a site or an app. Pick an app store that you know won’t carry shady app developers. Teach your kids about phishing scams, how they work and what to do when they think one arrives in their email or messaging apps. But most important, let the subject of online security be an ongoing discussion.

These are some big-picture considerations and a few on-the-ground concerns to help you start thinking about online security. Only you can figure out the best way to tell your child to keep their online travels safe and protect your whole family.

Image: mixetto 

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How to Make Summer Camp Fit Your Family’s Budget

Affording summer camp can be a struggle for many working families. Here are a few ways to make camp fit any family budget.

Last summer, the New York Times ran a piece about families who can’t afford summer camp or other programs for their kids. It highlights a problem for many working parents: Summertime care for kids is expensive.

This is especially true if your kids are in public school during the year. You suddenly go from paying nothing to have your kids cared for all day to paying a whole lot of money. Many parents may not have much choice but to find summertime childcare.

If this is the boat you’re in, here are a few ways to find a summer camp for your kid and options that may make it more affordable.

1. Check Online for Summer Camp Options

These days most states and major metropolitan areas have parent blogs or magazines devoted to the local area. In my local Indianapolis, for instance, we have Indy’s Child magazine and IndywithKids.com. Both feature a listing of local summer camp options.

Chances are you can find something similar for your area. If you can’t, there are national resources, too. The American Camp Association has a database for finding day and overnight camps in your area. It leans towards ACA accredited camps, though it will list some not accredited. When I ran it for our area, it turned up some but not all the options I know are available. Still, it could be a place to begin your search for a summer camp.

2. Choose a Less Expensive ‘Base Camp’ Option

One thing that makes summer camp expensive is the specialized options. I’ve seen sports camp, Lego camp, technology camp, horse camp and more. If your kid goes to these specialty camps for the summer, you’ll undoubtedly spend more money.

However, many local YMCAs, schools, daycares, churches and city parks programs offer more traditional summer camps. Our daughter’s daycare, for instance, offers a school-aged summer camp program where they hang out at the daycare for much of the day, but also take trips to local parks, libraries and pools. It’s nothing spectacular, but it’s safe, fun, affordable childcare.

If you can find an option like this, build your summer around it. Then you can splurge on a week or two of more expensive specialty camps for your kid.

Where do you find these less expensive options? Check out the following:

  • YMCA: The Y runs summer camps all over the U.S., and sometimes offers a sliding scale fee to make things more affordable. While they offer more expensive specialty camps, most local Y’s also offer traditional day camp options.
  • Churches and religious centers: Many churches and religious community centers offer summer-long day camp options that are quite affordable.
  • Schools: Local schools with before- and after-care programs may transition those into affordable summer camps with fun activities for kids.
  • Parks and recreation: City and county parks and rec departments also run summer camps, and these tend to be more affordable than other options.
  • Boy Scouts and Girl Scouts: If your child is a scout, look into their summer camp options. These are often overnight options, but they tend to be very affordable.
  • Local businesses: Sometimes local businesses offer summer camp-like programs that are for mentoring older kids who may want to become entrepreneurs. These camps may be based on an application process, so be on the lookout well ahead of time.
  • Local colleges: Often local colleges and universities provide camps as a way to get their own students teaching, leadership and coaching experience.

3. Consider a Nanny Camp

Can’t find any affordable summer camp options in your area? Consider putting together a “nanny camp” with friends or neighbors. This is basically a summer-long nanny sharing program.

You’ll hire a nanny to take care of a reasonable number of kids — say four or five — and the nanny can do some summer-camp activities, like going to local parks and pools. This works best if the kids in the nanny camp are around the same age, and if you can provide the nanny with a safe way to get the kids around town.

4. Ask for Assistance

If you can’t afford even the least expensive camp option on your list, ask for financial assistance. Many summer camps offer scholarships for enrollment fees. Sometimes the information about these options isn’t easy to find, so ask about it. Even if you feel like you make too much money to qualify, it doesn’t hurt to ask.

You should also check for discounts. Some camps offer early registration discounts, and others will give you a reduced rate if you pay for the whole season at once. Tons of summer camps also have sibling discount options, which is why it often makes sense to enroll your kids in the same summer camp.

Making summer camp fit into your family’s budget can be tough, especially if you’re not already used to paying for full-time childcare. But there are plenty of excellent, affordable options out there if you just know where and how to look.

Cards for Camp?

You may be tempted to apply for a credit card to earn rewards for your summer expenses. If you do, be sure to check the terms and conditions so you know what you’re getting into. Also, make sure to check your credit to make sure you’ll qualify. You can check two of your scores on Credit.com.

Image: SolStock

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These Movers Will Help You Escape an Abusive Relationship for Free

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In 1997, high school students Aaron and Evan Steed launched their moving service, Meathead Movers, as a way to make money while juggling sports and school. Based in San Luis Obispo, California, roughly midway between San Francisco and Los Angeles, the company’s business was a hit. But periodically, Steed and his partners received upsetting calls — from panicked women trying to flee abusive relationships.

“We’d just help them out for free,” no questions asked, Aaron Steed told Credit.com. Once Meathead Movers opened four offices and began serving the Los Angeles market, they continued to help out victims of domestic abuse free of charge.

“We just kept helping out, and after three years we found ourselves in a contentious situation where the batterer came home and the police were called,” Steed said. At that point, “we realized we had to team up with a local domestic violence shelter” in order to get it done right.

One day, a friend of Steed’s passed along a contact at The Women’s Shelter Program in San Luis Obispo, which offers women and children affected by domestic violence counseling and support. After speaking with a former executive director there, Steed began collaborating on a strategy to better serve the families without putting anyone in harm’s way. The first partnership was formalized in 2001; today, Meathead Movers has nine partnerships with women’s shelters throughout Central and Southern California.

When victims call asking for help, Steed turns them over to a case worker at one of Meathead Movers’ partners, like Good Shepherd in Los Angeles, which then determines the best course of action. “They’ll confirm it’s a legitimate situation, provide housing, legal advice, and all kinds of other things,” Steed explained. “Then, once it’s time to actually move the person out, the shelter will contact us and we’ll do the move.”

Meathead Movers also often helps victims leave the shelter when it’s time to strike out on their own. By his estimate, Steed’s company has helped between 350 and 400 victims. “We don’t want moving to be a hindrance to get out of a bad situation,” he said.

It’s a random act of kindness that’s inspiring other small businesses: In July, Meathead Movers launched the site, MoveToEndDV.org, which challenges 10,000 businesses “to take the #MoveToEndDV pledge and make a donation or provide a product or service for free to help the shelters that support victims of domestic violence.”

Image: Meathead Movers 

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The 10 Best Cities to Be a Kid

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Image: unguryanu

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Millennials Prefer Pets to People. Here’s Why Maybe That’s Not a Bad Thing

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Make fun of pet lovers all you want — dressing a dog in the latest canine trends, dedicating half the living room to cat condos and feeding an animal human-grade food still doesn’t cost as much as raising a child. Sure, having pets isn’t cheap, even if you’re buying only necessities, but financially speaking, it’s better to have a furbaby than a human baby.

So it’s not a stretch to say millennials’ apparent tendency to fill their homes with pets rather than people is a smart money move. The Washington Post’s Abha Bhattarai just wrote about this, citing a survey showing higher pet ownership among young Americans: About 75% of Americans in their 30s have dogs and 51% have cats, and among the general population, those rates are 50% and 35%, respectively. The figures come from a survey of 2,001 adults conducted by Mintel, a marketing research company.

Meanwhile, today’s young Americans are less likely to be married or have kids, when compared to previous generations’ behaviors in their 20s and 30s. Bhattarai quoted one researcher who went as far as calling pets a replacement for children.

“They’re less expensive,” Jean Twenge, a psychology professor at San Diego State University, told the Post. “You can get one even if you’re not ready to live with someone or get married, and they can still provide companionship.”

Many people would likely argue that cuddling with a puppy isn’t as gratifying as raising a human being, but in this era of record-high student loan debt, disappearing starter homes and dismal personal savings, delaying or skipping parenthood can be a practical choice. It’s not that you can’t have it all. Perhaps starting out buying kitty litter instead of diapers will help young people achieve their dreams of being debt free, owning a home or retiring comfortably.

Ultimately, if it’s companionship you seek during that dark period between paying rent and payday, animal snuggles are probably more than sufficient, not to mention relatively economical and low-maintenance.

Disclosure: This post was written by a childless millennial dog mom.

Image: Renato Arap

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7 Free Tools to Help Calm the Back-to-School Chaos

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Whether you’re working or a stay-at-home parent, back-to-school season can get rough. Between strict schedules, meal planning, homework, and maybe even extracurriculars, life just gets a bit chaotic.

Luckily, technology can make things a bit easier on parents. With all the apps available today, there are loads of great free tools that can help you handle everything from schedules to meal planning. Here are seven of the best free — and really cheap — tools to try this back-to-school season.

1. Google Calendar


While there are plenty of great calendar apps on the market, Google’s still takes the cake. Available for iOS and Android, the interface is great on just about any screen. It lets you choose different views, from one month to a daily agenda, or a custom view like two or three weeks. Plus, you can easily share Google Calendars with a spouse or your older kids, so that everyone syncs up seamlessly.

One of the best things about Google Calendars, though, is the ability to set up multiple calendars. Use one for work events, one for personal appointments and one for the kids’ school schedule. You could even keep a separate calendar for each member of the family. Each calendar will be color-coded, so you can get an at-a-glance idea of what’s coming in any given week.

Two other great Google Calendar features: reminders and repeating events. With reminders, you can set up alerts on your phone for repeating or one-off events. You can even make sure Google keeps reminding you until you check the reminder as complete, so you don’t accidentally blow off making that important appointment. And with repeating events, you can quickly add regular events to your calendar.

2. Google Keep

Again, there are multiple note-taking apps on the market, but Google Keep is definitely worth checking out. This simple app lets you take notes or create to-do lists that look like sticky notes. You can organize them by category, and you can even color-code the notes to match your calendar colors.

The best thing about Keep is that you can share notes with others. You can, for instance, keep a running grocery list in a Keep note that you share with your spouse. That way whoever has time to stop by the store on a given weeknight has the list ready to go.

3. Cozi


Cozi combines some of the functionality of Google Keep and Google Calendar. It comes in a free and paid version. The free version runs ads. The paid version comes with additional features, including a birthday calendar and contact list.

If you want to keep just a single shared family calendar, Cozi is a great option. Like Google Calendar, it lets you share your calendar with a spouse or multiple family members. The calendar app is slightly less user-friendly than Google’s — but only slightly. It does include the additional feature of a meal planner, which is great for busy parents. Plus, Cozi lets you keep categorized shopping and to-do lists, making it a good all-around organization app.

4. Pepperplate

This meal-planning app can take some time to set up because you’ll need to build or import your own recipes. But you can import recipes from a web link, making it an easy option for organizing all those Pinterest recipes you’ve been meaning to try. Once you get your recipes into your recipe box, you can tell the app which recipes you’re shopping for this week. Then, it’ll automatically generate a shopping list to use at the grocery store.

As far as meal-planning apps go, this one has great reviews. It doesn’t do the planning for you, but it’s a good option if you already have a go-to bank of recipes you use on busy weeknights.

5. Asana

This free to-do app is great for busy parents who want to track both work and home tasks. As with many of the apps featured here, you can share this one with a spouse or older kids. Asana lets you assign tasks by person and give tasks a due date. You can also organize tasks by category or project, making it easy to work on the most important projects first.

One of Asana’s biggest strengths is ease-of-use in a mobile format, though you can also access it by desktop. Plus, it allows you to sort your to-do list in a variety of ways, from tasks by due date to tasks by assignee to tasks by project.

6. Chore Monster


Want to get your kids doing more chores this school year? Try Chore Monster. This easy-to-use app lets you as the parent assign and create point values for various chores. You can have certain chores your kids must do, and certain chores they can choose to do. When the child completes the chore, you check it off, and they earn points.

What do they do with all those points? It’s up to you! Add rewards that kids can purchase with their points. Rewards could be physical or monetary, or you could just give kids extra screen time. The cool thing is that you can assign some rewards with a low-point value, so kids can pick them up often. But you can also help kids grasp the idea of saving by giving them a few high-point-value options, like a big weekend camping trip or an expensive new toy.

7. Evernote


This app has been around a while, and it’s a classic. Many moms swear by it, and it does have a bunch of functions to try. You might use it for keeping track of online articles you want to read while waiting in the school pickup line. Or you can use it to get rid of all that paper-based clutter kids bring home from school.

With Evernote, you can store scans or photos of paper items, so you can easily upload the school calendar and menu to an online format. You could also use Evernote to store scans of special projects or papers your kids bring home, so that you’ll hang on to them without having to find a place for thousands of pieces of paper every single school week.

Image: Erik Khalitov

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Custodial Accounts: Are They an Option for Your Family?

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When you want to set up a savings account for your child, you take them to your financial institution and have them open an account. Heck, in this day and age, you might just mosey on over to its website to get things set up.

But what about when you want to something more advanced? If you are trying to invest in the market or put real estate in their name, you’re likely to run up against the idea of custodial accounts.

Custodial accounts are like a lite version of trusts. Trusts are complicated to set up so they usually involve a fair amount of legal fees. Custodial accounts have parameters dictated by your state, so getting them set up is comparably simple and less expensive. Doing so usually involves little more than talking with someone at your financial institution.

Types of Custodial Accounts

There are two types of custodial accounts: Uniform Gift to Minors Act (UGMA) accounts, and Uniform Transfer to Minors Act (UTMA) accounts.

UGMAs are good for investing in securities, and are typically transferred exclusively to the minor at age 18, though this age does vary from state to state.

UTMAs are also for securities, but can be used for property such as real estate, too. The typical age for transfer on these accounts is 21, but you should consult state law, as this will vary geographically.

With all custodial accounts, there are three parties: the donor, the custodian, and the minor. The person putting money into the account is the donor. There can be multiple donors to the account, but each donor can only contribute up to $14,000 per year before incurring a gift tax.

The donor and custodian can be the same person. If you are setting up this account for your own child, it’s likely that you will be both. As the custodian you manage the investments, and are even allowed to withdraw money, but only if that money is used to provide for the child. You can’t go out and buy a new set of wheels with it.

When Not to Use a Custodial Account

Custodial accounts are cheaper to set up than trusts, but there are some instances where you will want to think twice before going this route.

  • You’re trying to lessen your tax burden. At one point in time, custodial accounts allowed parents to dodge part of their tax burden if they played their cards right. Legislation has come to pass that now disallows that advantage. In fact, if your child’s account makes money beyond capital gains on securities, you will have to file an additional 1040 in their name. In many instances, children actually have a higher tax burden than a single adult would on this type of income.
  • You’re contributing a lot of money. Sizable gifts, especially those that are five figures or larger, will often get more favorable tax treatment if they’re made via a trust rather than a custodial account.
  • You die before your child turns 18/21. If you are the custodian of your child’s account and you pass away before he or she has reached the age to claim the account, UGMAs and UTMAs become a part of your estate. Before they can be passed on, they’ll incur an estate tax. While very few young parents can predict a tragedy of this magnitude happening, it is something to consider.
  • You think your child will be on the cusp of qualifying for financial aid. If you make a lot of money, your child probably won’t qualify for federal financial aid. If you’re a low- to middle-income family, though, it’s important to keep in mind that the money in custodial accounts will be counted as your child’s assets. When they’re filling out the FAFSA, their own assets will count more heavily than your own, potentially limiting their eligibility for certain types of aid.
  • You’re trying to be fair. If you have or are planning on having more than one child and want to split things up equitably, custodial accounts can be problematic. Once the account is set up in one child’s name, the funds cannot be used or given to another. Let’s say one of your investments does really well, and then four years later you have another child. You may not be able to contribute enough catch up money to make things fair and balanced. Even if you could, it would be a complicated balancing act over the course of 18 to 21 years. Unless you are going to open the accounts for a set of twins at the same time with identical contributions and investments, trusts are a better vehicle to split things up evenly.

When to Consider Custodial Accounts

If you don’t have the assets to justify the fees of opening up a trust fund, you don’t mind things being unequal among siblings, and you still want to give your children assets that can grow and be accessible by age 18, 21, or whatever your state’s age requirement may be, a custodial account could be a good option for you. There are no take backs though once it’s in, so even if your child seems unable to manage money well, he or she is still going to be able to make decisions about the custodial account. As you’re making your decision, sit down with an accountant to talk about the tax implications in your state, and a lawyer to talk about legal fees and ramifications of whichever route you choose to pursue.

The post Custodial Accounts: Are They an Option for Your Family? appeared first on MagnifyMoney.

7 Subtle Ways to Teach Your Kids About Money

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As my husband and I prepare to have our first child, something I’ve been doing a lot of thinking about is how to financially prepare her for the future (along with how to prepare her emotionally, and in every other way a parent needs to prepare her child, as well). As a financial writer who has spent her career surrounded by smart, savvy financial people, I feel I’m somewhat at an advantage — but that doesn’t make the task any less daunting.

Teaching our kids to be financially savvy begins at an early age, even if at the ripe old age of 2 there isn’t much they’re doing other than playing with toy cash registers (hey, it’s a start!). Over the course of my career writing about parenting and finances, here are some of the pieces of advice I’ve picked up along the way that might help me to subtly teach my own daughter how to handle her finances. Maybe they’ll help you, too.

Idea 1: Keep a family money jar for coins

 

What it teaches: Every little bit of savings counts.

I will never forget the big, wooden coin jar we had in our family kitchen the entire time I was growing up (and it’s still there to this day). I remember being amazed at how much money could actually fit into that jar every time we counted it (who knew coins could amount to hundreds of dollars?). The point of the coin jar is to show your kids how even the smallest amount of change can add up, and if you can put that money towards something fun for the whole family, a new game for game night or ice cream out, for example. You can show your kids that it’s possible to save up for fun things without having to dip into savings or put it on a credit card.

Idea 2: Shop with lists

 

What it teaches: How to avoid impulse spending.

This is a small one, but since kids notice everything, it’s not surprising they would pick up on this concept, as well. Taking a little time to put together a list with your kid before shopping will teach them the importance of planning and cutting down on waste, and you’ll be less likely to make impulse purchases along the way, as well, which helps teach the concept of budgeting. 

Idea 3: Make charitable giving a family effort

 

What it teaches: The ability to make donating a priority.

Kids who grow up with families who donate will be more likely to make charitable giving a part of their future, as well. It’s always easy to say we don’t make enough money, there are too many other expenses or we’re busy saving for something else. Instead of putting it off for the future, if you can show your kids that budgeting for charity makes it easier to donate — and get your kids in on the action of picking the charity your family donates to — then they’ll be more likely to get excited about the idea and stick with it into the future.

Idea 4: Provide daily allowances for kids while on vacation

 

What it teaches: The importance of financial planning.

Vacations can be a landmine of spending for families, or it can be a great opportunity to teach fiscal responsibility. Rather than deal with kids who get excited every single time they pass a souvenir store or ice cream shop, try doling out daily allowances at the beginning of each vacation day and having your kids use that money as they chose. When the money runs out, they won’t be getting any more to spend. This is also a great way to teach kids the value of saving up for things they really want. For example, if your child spots a more expensive item at the beginning of the trip that he’d like, that’s a great opportunity to sit down with him an explain exactly how many days he’d have to save up his daily allowance to be able to afford the item, and then he can decide on his own if he’s patient enough to do so.

Idea 5: Match your kid’s savings

 

What it teaches: How some retirement plans work.

Whether it takes a little added incentive to get your child interested in saving or not, the idea of matching your child’s savings contributions (up to a certain amount, if you’d like), will help prepare him for the real world, as well. If your kid has grown up with the concept of savings matches, she’ll be more likely to do everything she can at her future job to get that retirement match, assuming it’s still being offered.

Idea 6: Include your child when you monitor your credit score

 

What it teaches: How to access credit scores, how credit cards work and why it’s important.

For most young kids, material possessions appear from out of nowhere, as if they’re free to whoever wants them. Of course we as adults know this isn’t the case, and it’s our duty to teach our kids how buying and using credit actually works. To do so, include your child on the practice of checking in on your own credit report and credit score (find the best free credit score sites for each bureau here), and explain to him how your credit score helped you attain the things your family enjoys, like your car and house, and how your behavior with credit cards and loans impact the score.

Idea 7: Set them up with different savings accounts early on

 

What it teaches: The importance of divvying up their money.

If you have a 529 for your children, involve them in your monthly (or however often you make them) payments, and explain to them the concept of compound interest and how this will help them be able to better afford an education down the road. (Don’t have a 529 set up yet? Check out this piece for the five best 529 savings plans anyone can use.) Set them up with a savings account and checking account as well, and help them determine how to best divide up their allowances and/or earned incomes into these two accounts so that they have money to save for emergencies, as well as to spend on fun things. If your family partakes in Idea No. 3 (charitable giving), have your kid contribute a portion of her allowance and/or earnings towards your family goal of donating to a charity, as well.

The post 7 Subtle Ways to Teach Your Kids About Money appeared first on MagnifyMoney.

The Importance of Having a Will and Talking About It with Your Loved Ones

Finances

There are a few important steps in building your financial foundation that aren’t much fun to talk about.

Writing a will is right at the top of that list.

It’s obviously a morbid topic, and it’s also a step that can force you to have some difficult conversations with family members. No one likes thinking about what would happen if they die.

But it’s important precisely because it’s such a tough topic. If you don’t handle it now, all of those difficult and confusing decisions are going to be left up to other people. That could not only result in outcomes you wouldn’t want, but it may cause your family members a lot of stress and conflict.

So in this post we’ll talk about why you want a will, even if you don’t have a lot of money, how to get it handled, and how to have some of those difficult conversations with your loved ones.

The Benefits of Having a Will

The popular perception of a will is that it allows you to determine who gets all of your money and possessions when you die.

And while that is a part of what it’s for, there are other benefits to having a will that have nothing to do with money. That’s especially true if you have children.

Here are four major reasons you want to have a will in place.

1. Naming Guardians

For parents, the biggest reason to create a will is to name guardians for your children if you pass away. You can name primary, secondary, and even tertiary guardians just to make sure that you have all your bases covered.

Without a will, this decision would be made by the courts. Better to take it into your own hands to make sure that your children are always in the best situation possible.

2. Naming Custodians

A will also allows you to name custodians for your children. These are the people who would be in charge of whatever money is left to your children up until they reach adulthood (typically age 18 or 21).

The custodians are often the same as the guardians, but they don’t have to be. In any case, this is another important decision that you’ll want to be in charge of just to make sure that your children’s best interests are considered.

3. Passing Property

Of course, a will also allows you to decide who gets things like money within your savings and investment accounts, your house, and any other personal possessions you’ll be passing along.

4. Keeping the Peace

Without a will in place, all of these decisions would be left to your surviving family members. That’s not only a lot of work to put on their shoulders, but it could be the cause of fighting if people aren’t in 100% agreement about what should happen.

Talking to your family about these decisions ahead of time and being very specific in your will makes the process much easier for everyone when the time comes.

How to Get a Will in Place

There a couple of different ways you can create your will.

One option is to find an estate planning attorney in your area who can walk you through the entire process and get everything in place. Most attorneys will likely charge a couple of hundred dollars for this, though you may be able to get a discount through your employee benefits program.

There are two big reasons to consider using an attorney:

  1. If your situation is relatively complicated, such as having significant savings and investments, owning businesses, owning multiple houses, or having gone through a divorce, a lawyer can make sure that all of that is accounted for correctly.
  2. A good attorney will not only understand the law, but will take the time to ask about your personal situation and goals, clearly explain all of your options, and help you make the best decisions possible. That kind of guidance and the peace of mind it provides can be worth paying for.

The alternative is to use one of many DIY tools out there, like Nolo, LegalZoom , and Rocket Lawyer. This is the less expensive option, and it may be a good choice if:

  • Your needs are very basic, or
  • You’ll be moving to a new state in the near future, meaning you’ll need to get a new will done soon anyways. In that case it may make sense to get it done inexpensively now and pay for an attorney once you’re in the new state.

How to Talk About a Will with Your Loved Ones

Creating a will can bring up some tough conversations with your family members.

If you’re creating your own will, you may have to talk to a spouse about who you would want caring for your children, and there may be some disagreement there. You’ll also have to ask the people you want to be guardians whether they’re willing to do it, and you may run the risk of hurting feelings by not choosing people who would like to be in that position.

But it’s not just your will you need to consider. Many adult children are put into tough situations when their parents either never created a will, never updated it to reflect their changing circumstances over time, or simply never talked about their wishes with their family. That could leave you with the significant responsibility of figuring it all out after the fact, and it could also put you in the tough position of negotiating or arguing with your other family members about what should b done.

So it’s a good idea to talk to your parents about their wills too, just so the entire family can get on the same page and have a plan in place.

Here are some things to keep in mind when you have any of these conversations, to make sure they’re as positive and productive as possible:

  • Many people are uncomfortable talking about this subject, for a variety of different reasons. It may take several tries before you’re able to have a meaningful conversation, so expect that going in and be patient.
  • Start by asking the other person what they want, rather than talking about what you There’s plenty of time for you to have your say, and in the meantime you can make sure they have the chance to be heard.
  • When writing your own will, keep the feelings of your family members in mind but make sure to put the interests of your spouse and/or children first. Putting them in the best position possible is the top priority.
  • When talking to your parents about their wills, make sure to get all siblings and other family members involved. Otherwise there could be fights later on because someone feels like decisions were made behind their back.
  • Be willing to compromise, especially when it comes to who gets money and/or possessions. These are difficult decisions and it’s better to stay on good terms with the people you love than to get everything you think you’re entitled to.

Creating a will isn’t an easy topic, but it’s an important one for you to address head on both for yourself and with your parents. You will be much better off for having the conversations and for getting things in place.

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