Why That Stroller Strains So Many Parents’ Budgets

Miami mom Stephanie Viney, 28, says she chose a pricey UPPAbaby stroller for its many features and sturdiness. Baby strollers come in a variety of styles and price points, from $20 to more than $1,000. (Photo courtesy of Viney.)

No one needs to tell a new parent that raising a child in America is a pricey endeavor.

New parents can expect to spend about $233,610 on a child’s basic needs through age 17, excluding savings for higher education, according to the U.S. Department of Agriculture.

One of the first purchases you’re likely to make as a new parent is a stroller. When it came time for Brooklyn resident JiaYao Liu, 23, and her baby’s father to buy a stroller for their baby boy, now 3, they walked into Babies R Us expecting to spend about $80-$100. They were sorely mistaken.

“I didn’t expect it to be that expensive until I went and I looked,” Liu says.“You just want to carry your child from Point A to Point B, and there are some strollers with a whole bunch of toys on them, and I don’t think it’s necessary.”

The couple ultimately purchased the most-affordable stroller they could find. Liu says it was a store brand and the practical choice, based on her needs. Still, at around $130, it was a little outside their price range.

New Orleans resident Demetra Pinckney, 29, had a similar experience when she and her husband picked out a stroller for their baby registry.

“They have some strollers that are $500, $600,” Pinckney says. “I’m thinking: ‘Oh my goodness. No, I have to live. They have good strollers that don’t have to cost you a whole paycheck.’”

The stroller she picked out and ultimately received as a gift cost about $400.

Over the past few decades the baby stroller has gone from a practical parenting necessity to a luxury item for some, says Paul Hope, senior home editor at Consumer Reports. While you can still find a budget-friendly stroller, an increasing number of new premium models are priced north of $1,000.

“What I think has happened is that we have really seen the emergence of a lot of premium brands and they have become sort of a status symbol,” says Hope.

Why are baby strollers so expensive?

Marketers and manufacturers have capitalized on a ripe market, says David Katzner, president of The National Parenting Center, a parent advocacy organization, explaining why more high-priced strollers have entered the market. The organization has reviewed parenting products since 1990 and this year reviewed its first $1,300 stroller.

“For parents, our testers, the sticker shock is remarkable,” Katzner tells MagnifyMoney. He says the high prices prompt some parents to jokingly ask if the stroller is magical — for the money, can it educate the children, or even change a diaper?

Some parents are willing to spend top dollar even for products that will only be used until their little ones are able to walk on their own.

Miami mom Stephanie Viney, 28, says an expensive stroller is worth it if you have the money to spend.

When she and her husband were getting ready to have their first child, Finn, now 23 months old, they picked out an upscale traditional stroller: the UPPAbaby Cruz stroller, car seat and accessories totalling $1,100 for their baby registry.

“It is definitely expensive once you get everything you need; what sold me on it was the big, easy-access basket underneath,” says Viney. The stay-at-home mother and hairdresser says the stroller has held up well and is practical for her on-the-go lifestyle. “The UPPAs are sturdy strong strollers. You get what you pay for.”

A year after they received their first stroller, the couple shelled out $1,200 to upgrade to an UPPAbaby Vista stroller, large enough to hold both Finn and his four-month-old baby brother.

What you’re getting for the money

The most expensive strollers may be made with premium materials like leather upholstery, have some extra padding in the seat area, larger wheels that absorb shock, cupholders or extra basket space underneath. Viney’s UPPAbaby Vista even incorporates a “piggyback” attachment, which will allow one child to stand and ride along when they’re big enough. She and her husband are both tall, so she says it helps they can adjust the handlebar up and down, too.

“With very premium priced strollers, you might get premium materials and construction [or] the brand name, but there are very few categories of anything we test where paying more gets you more in the way of reliability or performance or even longevity,” says Hope.

How to make an informed stroller purchase

Even for Katzner, who has been reviewing parenting products for over a decade, navigating the stroller industry is at times “very, very confusing.”

“Worst of all is walking a trade show floor when they are all just filled with all the same product,” says Katzner, whose position requires he often attend trade shows where manufacturers display new strollers, car seats, feeding and nursing systems and other baby products.

“In many cases the person in the booth is struggling to show how their stroller is different from the guy next to them,” he says. “You might find as a parent you are in the exact same place. You might say, ‘what’s the difference?’”

Compare and test drive

A stroller is not an insignificant purchase. You’ll need to purchase one just like you would need to purchase a car seat or any other baby items and you will likely use it for a number of years. With many options to consider, your decision may depend on myriad factors.

Whatever you do, don’t let peer pressure be one of them, says Katzner. He advises parents not to simply choose what’s popular or has the best ratings online.

He recommends parents to some online research, take notes, then go test out strollers in person before they settle on a pick.

If you feel pressured to keep up with your peers, keep in mind, Consumer Reports has not found any reason to buy a stroller that costs more than $1,000, says Hope.

While you’re at the store, try any of these shopping tips to help make your decision.

Consider your lifestyle

Stroller options can be categorized into three main families: traditional, jogger, and umbrella. (Though you can find strollers with mixed features.)

What you ultimately choose will depend on how you plan you use the stroller.

If you are very active and plan to exercise with the stroller or take it along with you on tough terrains, you may want to consider a jogger. On the other hand, if you will need to lift the stroller often, you may choose, instead, an umbrella stroller.

“Umbrella strollers are really fabulous for collapsing on the subway or in transit going to the airport,” Hope says.

After her son turned 2, Liu supplemented her first stroller purchase with a $20 umbrella stroller from Target.

“It was difficult because of the subway stations,” she says of her first stroller. “Every time I had to fold the stroller and carry my bags, my son and his bags up the stairs.”

However, many jogging and umbrella strollers can’t be used with children less than 6 months old, because they don’t always accept car seats. That’s why Liu bought the big, chunky stroller, first. Hope says most people opt for the traditional stroller, as it suits most needs.

“Traditional strollers that accept an infant car seat or are compatible are typically the best value,” says Hope. “You’re guaranteed that the stroller will be safe to use with a baby that is under six months.”

Test for ease of use

Put the stroller through a comprehensive test when you’re shopping to test how easy it is for you to use. After all, you’re the one who will be spending the most time with the stroller. Katzner recommends you choose something that makes your life easier.

Everyone will have different determining factors. In general, Hope suggests shoppers check for how it feels to do things like lift the stroller, strap in the child, adjust the backrest or lock the wheel brakes.

In addition, he advises shoppers to take the stroller for a ride to test how easy it is to navigate. Hope suggests going with a small child if you already have one — or ask a friend or family member if you can take their youngster for a test drive — to simulate real-life situations like making tight turns and encountering curbs.

Liu says her first stroller weighed about 10 to 15 pounds, and she could fold and carry it with one hand when traveling in the city. She says a basket underneath also came in handy when she went out grocery shopping or had her son with her and had to bring along a bunch of his things.

On the other hand, the Pinckneys have a pickup truck, which makes it easy to load and unload a bulkier stroller. They also live in a suburban area, where they are less likely to need to lift or fold the stroller.

Look for the JPMA logo

“There is not a whole lot you can look for as a consumer in the way of safety,” says Hope. But, organizations like the Juvenile Product Manufacturers Association (JPMA) regulate strollers and they test for a whole host of safety factors, so you don’t have to. Look for the JPMA logo on the stroller box to feel confident the stroller you put your baby in meets today’s safety standards.

Some strollers and online retailers like Amazon.com may display the National Parenting Center’s seal of approval, too. The organization has real parents test and review children’s products on many features, so you can get a sense of what it’s like to actually use the stroller. Although the strollers the NPC reviews are generally already JCMA-approved, the organization notes that its seal of approval does not imply or guarantee product safety.

Question the salesperson

The salesperson’s job is to make sales, but your job is to be a responsible consumer. If you get to the store with one stroller in mind, but the salesperson pushes you toward a different pick, ask why, says Katzner.

“Of course the salesman is going to try to sell you the $600 stroller,” says Katzner. “Put them to the test and ask why. What does it do? What’s the difference?”

In the end, you’ll walk out more confident in your choice having asked all your questions, instead of feeling as if you were coerced into choosing a stroller with features you weren’t interested in, or may not ever use.

Think ahead

Hope says most traditional strollers that carry an infant car seat can be used from when the baby is born until they are about four or five years old; traditional strollers commonly adjust to accept a child that weighs up to about 50 to 60 pounds.

If you plan to have more children, you’ll need to do some forward thinking when choosing your first baby stroller. A durable stroller can go a long way. And, as long as safety standards don’t drastically change, it could serve you for more than one child.

When they had their second child, Viney ran into an issue. She now needed a double stroller, but her UPPAbaby Cruz couldn’t be converted into one.

“Once I realized I got the wrong UPPAbaby I was very upset,” Viney says. Because they already had $500 worth of seats and accessories, they decided to stay with the same brand and get a UPPAbaby Vista — the new stroller and a second seat cost about $1,200.

“The sales guy should have definitely asked if we were going to plan for more kids because when spending this kind of money you want to have it for long,” says Viney.

The bottom line: Don’t follow the crowd

Asked if she would have chosen a more expensive stroller, were money no object, Liu says no.

“If at the time I had more money or wasn’t strapped for cash I would have gone with the same thing. It was practical. It was fine. I have no complaints about it,” says Liu.

Pinckney, on the other hand, says she would choose a more expensive stroller if it had features her current stroller is missing like a tray up top, for parents, or cupholders.

It all comes down to personal preference. Choose the stroller that best fits your lifestyle at the best price point for your budget. Most importantly, pick a stroller that will make your life as a parent that much easier.

“Do not go beyond your means,” says Katzner. “Do not get something that is going to be unwieldy and make your life more difficult.”

The post Why That Stroller Strains So Many Parents’ Budgets appeared first on MagnifyMoney.

5 Alternative Gift Ideas that Don’t Come from a Toy Store

 

holiday gift ideas
iStock

Parents spent an average of $422 per child on holiday presents in 2016, according to a survey by T. Rowe Price. An estimated 56 percent of parents with children ages 8 to 14 use credit to purchase gifts, which are bound to include gadgets that’ll be old news by New Year’s but not paid off until months after that. 

Indeed, the holiday season — the most wonderful time of the year, as it’s known to some — may be far from wonderful for budgets as some parents try to fulfill every child’s every wish. 

A 2016 Experian holiday shopping survey found:  

  • 56 percent of people said they spend too much money during the holidays. 
  • 55 percent admitted that they feel stressed about their finances during the holidays. 
  • 43 percent said the extra expense makes the holidays hard to enjoy.  

Some parents overload their children with “stuff” that will quite possibly be obsolete or bested in popularity by the next big thing just in time for the next holiday season. No great mystery that the U.S. has 3.1 percent of the world’s children, but consumes 40 percent of the world’s toys. 

“We are a materialistic society, and often our rituals and celebrations reflect this,” says Dr. Mary Gresham, an Atlanta-based psychologist who specializes in financial and clinical psychology. “Many parents get caught up in this and start to believe that the right toy will bring happiness to their child.”  

Here are five gifts to give your little ones besides presents this year. Your overflowing closets and pockets may thank you for considering other gift options.  

The gift of a financial head start

You could get them a $50 toy that they’ll lose or break in a matter of weeks … or you could open an online investment account in your child’s name and teach them the beauty of investing.

And don’t worry if you’re not an expert.  

Brendan Mullooly, an investment adviser for an asset management firm in Wall Township, N.J., suggests that novice investors interested in making a financial gift to a young person should use a service like Stockpile, an online company that simplifies the process of gifting stocks to minors.  Check out our review here

“You can purchase gift cards of individual stocks and some index ETFs to give as a gift,” says Mullooly.

And Stockpile allows you to buy fractional shares, so the gift cards can be for small amounts.  Mullooly recommends setting up view-only access to these custodial accounts so your young investor can check on how the investments are doing.  

“This offers a great way to give a gift that’s interesting, has monetary value, and also offers an educational aspect,” he says. 

The gift of giving

For children, the holiday season can be a “gimme” time of year. But it’s also the time when we often hear that it’s better to give than receive.  

Jayne Pearl, a family business and financial parenting expert and co-author of “Kids, Wealth and Consequences: Ensuring a Responsible Financial Future for the Next Generation, says it’s not hard to nurture a child’s giving spirit. She suggests combating the “gimmes” with the “givvies.”

Put part of your holiday budget toward giving to the less fortunate, perhaps through a charitable organization. For example, you could give a gift in your child’s name to an organization such as Unicef or the American Red Cross, or to an area animal shelter or humane society.  

“Giving kids the tools and the consciousness to try to help people is extremely empowering,” Pearl says.  

Her recommendation is to sit down with your children and find out what bothers them about the world, help them figure out how they can help, and make this part of your holiday celebration. Use the holidays as a time to teach your kids that “we have values and our values are not just ‘stuff,’ ” Pearl says.

The gift of membership

You can’t go wrong with season passes to a favorite destination like a local museum, an amusement park or the zoo. You can use them over and over throughout the year, which could ultimately help your family spend less on entertainment. 

Also, check out memberships to national organizations, like the Baseball Hall of Fame for the sports enthusiast. 

Or get a pass that’s fun for the whole family, like the $80 America the Beautiful Annual Pass, which pays for itself in as few as five visits to national parks. The pass covers entry to over 2,000 parks for a full year, and nearly 100 percent of sale proceeds goes toward improving and enhancing federal recreation sites.
 

The gift of travel

Pool the money you would spend on toys and trinkets and knock a destination off your family bucket list. You could time the trip to coincide with the holiday season or breaks during the school year.  

Erica Steed, 37, allowed her children to choose something they wanted to experience together in Christmas 2016. 

Ellison, who was 10, wanted to see the Statue of Liberty. Elian, 7, wanted to see snow, which doesn’t often happen in Georgia. They took a family trip to New York for the holidays, and although it didn’t snow, “we had such a great time that it made up for it,” says Steed, who lives in Roswell, Ga.

When you factor in the cost of airline tickets and lodging in New York City for a family of four during the holidays, this gift option didn’t save the Steeds the money they would’ve spent on presents.

But by planning, creating a budget and sticking to it, the family spent the holidays doing something they could all enjoy and remember for a lifetime. And this, Steed says, amounted to money well spent.  

The gift of learning

You know your children better than anyone. And every one of them is unique, with his/her own set of interests, so give a gift that helps a child develop existing or new skills. 

Sign them up for classes that help them take their passion or hobby to the next level.  

Consider coding camp for your computer whiz or cooking classes for your foodie. You can find classes offered by educational institutions, community organizations, companies or individuals. 

You could also take a look at online classes like these from MasterClass, which can help your child hone a craft with a celebrity idol without leaving home. 

The post 5 Alternative Gift Ideas that Don’t Come from a Toy Store appeared first on MagnifyMoney.

I’m a Single Mom With a 6-Figure Business. Here Are the 3 Rules I Live By Every Day.

Emma Johnson and her two children. ( Courtesy of Emma Johnson)

Emma Johnson thrived, both financially and professionally, after enduring a complex, costly and painful divorce in 2009.

Johnson, now 40, a journalist and founder of WealthySingleMommy.com, an online community of professional single mothers, was at that time pregnant with her second child, working just 12 hours a week and living paycheck to paycheck. The fear of not being able to support her children on her own drove her to juggle multiple jobs and painstakingly manage her finances.   

Today she’s an entrepreneur with a successful digital marketing business, which includes her blog and podcast targeting professional single mothers, along with a new book, “The Kickass Single Mom: Be Financially Independent, Discover Your Sexiest Self, and Raise Fabulous, Happy Children.” In the book, which debuted Tuesday, Oct. 17, Johnson tells her personal journey as an entrepreneur and mom. She also maps out financial management strategies she hopes other single mothers can use, both to improve their finances and to establish a career they love.  

“Money is power and money is control,” Johnson tells MagnifyMoney. “Men have been very comfortable with that since a long time. And women are never going to have equality in the world, we’ll never have control of our life individually … until we have our money and just as much as men.” 

We spoke with Johnson about the three mantras of her daily life.  

1.Create a lifestyle that you can afford now.

Johnson lived a comfortable life, largely dependent on her ex-husband’s income and benefits while she worked part time. She found that separating from her husband also meant learning to recalibrate her money mindset. 

Legal expenses from the divorce quickly piled up, and she decided to return to full-time freelance work, which meant shelling out $2,000 a month for child care. She knew she had to live frugally in order to make ends meet. Some of the immediate changes she made: Stop buying new clothing for herself. And find as many useful secondhand items for her children as she could. 

“You absolutely have to go frugal,” she says. “I don’t care how rich you were before you were divorced or your kids’s dad is. … Your lifestyle is determined by how much money you have coming in the bank right now.” 

For other single mothers looking to cut spending, she has suggestions both big and small — downsizing to a smaller home, for instance, or just getting rid of unnecessary expenses like a cable subscription or a rarely used gym membership. 

When you are successfully living beneath your means, especially as a breadwinning single mother, Johnson says you can finally start to feel as though you’ve got control over your life again. “You have no control of your life,” she says, “if you are worrying about paying your rent.”   

2. Focus on earning more — unapologetically.

Single mothers shouldn’t just focus on saving more. They should also be unashamed about taking steps to earn more, Johnson says.   

The median income for families led by a single mother in 2014 was about $24,000, far below the $88,000 median for married-parent families in which Mom was the higher earner and the $84,500 median for households where Dad was the principal earner, according to a Pew Research Center report. 

Emma Johnson

The surprising upside of her divorce, Johnson found, was that she realized she had unintentionally suppressed her own financial and professional goals during her marriage to preserve the status quo. 

“Our society definitely values monogamous partnerships and marriage, and women genuinely do want that, but it often comes at a price for reaching our own potential,” she says. 

For Johnson, embracing her ambition wasn’t just a matter of choice. She was granted only one year of child support from her ex-husband, and the clock was ticking. She set about beefing up her income from freelance assignments, taking on everything from corporate blog posts to journalistic articles.  

By the time child support ended, she felt financially stable enough to refinance the the apartment in Queens, N.Y., that she and her ex-husband had bought in her own name. Roughly half a year later, she says, she had lined up enough consistent writing work to confidently support her family independently for the first time.   

Something else happened when she re-entered the labor force full time. She found she had bigger career ambitions than simply writing. She started WealthySingleMommy.com in 2012 as a hobby and slowly grew a loyal audience. (She reports 100,000 unique monthly visitors and 190,000 monthly page views.) 

A few years later, she experimented with monetizing the effort, snagging a mix of brand partnerships, speaking engagements and eventually, a book deal. While she worked on building the WSM brand, she continued to work as a freelancer (her primary income source).  

Finally, in 2016, Johnson says, she made an “internal shift” to focus on her business full time because she saw in it a better financial opportunity.  

“I really feel like it was an important internal shift I had to make because all the freelance writers I knew were [complaining] about not making money,” she says.  

This year, she expects to bring in $400,000 in revenue.  

3. Outsource labor — time is money.

Efficiency is the centerpiece of Johnson’s finance management philosophy. She quickly learned the value of paying professionals to take on some tasks in order to free up hours she could use to work, spend time with her children or focus on her personal needs.  

“You have to be very diligent with how you use all of these things — your time, your money, your energy, your headspace and your emotions,” she says.  

Johnson says that over the years she has invested heavily in child care, housekeeping and outsourcing chores (like laundry) that that take time away from work and her children and aren’t enjoyable. In her book, she writes that she has a handyman on call.  

To be sure, not all single mothers earn enough to outsource, a fact Johnson acknowledges. But she still encourages women not to feel guilt over delegating some household duties in pursuit of that extra quality time. She argues that it’s a worthy investment for peace of mind and efficiency. 

The bottom line: ‘You have go to bigger’

An advocate for gender equality, Johnson says her ultimate goal with the new book is to empower women across society — not just single mothers — to pursue their passions and become role models for a next generation with increasingly abundant resources and opportunities available. 

She hopes single moms will stop taking pity on themselves or viewing their situations as detrimental. “I want women to start seeing themselves as more than they are, and that their family status can be an an asset,” she says. 

For women living in small communities, Johnson’s advice is that maybe they should consider relocating for better job opportunities or finding work that they could be doing virtually.  

The fear of being on one’s own, Johnson says, can become the biggest motivator for pursuing a big goal, be it starting a business or returning to school. And she is convinced that the risks women take and sacrifices they make along the way will eventually pay off. 

“You have to go bigger,” she says. “You have to go bigger because there is less security.” 

The post I’m a Single Mom With a 6-Figure Business. Here Are the 3 Rules I Live By Every Day. appeared first on MagnifyMoney.

How to Raise a Kid You Won’t Have to Cut Off in 20 Years

Source: iStock

Today’s young people are more likely than previous generations to live with their parents, according to a 2017 analysis from the Pew Research Center. In 2016, 15 percent of 25- to 35-year-olds lived in their parents’ home, compared to 10 percent of Gen Xers in 2000.

Even when kids move out, it’s not uncommon for them to receive financial support from their parents. In fact, 62 percent of Americans age 50 and older gave a relative money in the last five years, with the largest sums often going to adult children, according to a 2017 Merrill Lynch retirement study.

Parents may not find those statistics encouraging, but the good news is there are ways to teach kids how to be financially responsible, and it involves raising the bar by asking kids to do more in the way of financial responsibilities. Studies have shown that when more is expected of a child (or anyone), they actually perform to that level of expectation. The same can be said of how they deal with money.

Don Roork, a Certified Financial Planner at AssetDynamics Wealth Management, has noticed a pattern with kids, adults and money. “Kids learn good money habits from just watching and being around their parents,” says Roork.

Roork also points out that money lessons aren’t always explicit verbal lectures on finance. “Kids watch mom and dad making good financial decisions, and voilà — the kids’ money behavior matches their parents’,” says Roork.

So when it comes to raising financially independent adults, it becomes clear that it’s important to start when they are kids. Here are some ways personal finance experts recommend easing your children — gently and kindly — into financial adulthood by weaning them from the family wallet.

Set expectations

As soon as your child begins asking for things like toys, restaurant meals or trips to the movie theater, they are ready to learn about the money it takes to support these wants. When a child expresses a desire for something beyond the basics, start the conversation then and there about how they’ll soon be responsible for these “luxury items.”

Of course, you don’t have to start charging them rent (not a bad idea, though), but you will want to follow up your expectations with actions.

For example, if your family goes out to eat, your child can pay for their meal or contribute to a portion of the bill. These expenses can be age appropriate and should increase over time as your child earns more money. They can start with things like snacks at the movies and move up to cellphone bills and car insurance.

Financial adviser Jamie Pomeroy of Financial Gusto says this should all start with communication: “Sitting down with your child and having a clear and frank conversation about who’s paying for what, can pay huge dividends.”

Another good exercise would be to show them prices on things they’ll need as adults, like a home or a car. Molding their expectations around what it takes to live will only help them down the road.

To drive this point home, Pomeroy suggests laying out a real plan designed to increase financial responsibility. “Make sure that you and your child are on the same page about what expenses they are responsible for, what you’ll continue to pay for (for now), and then introduce them to a budget to help them manage those expenses,” he says.

Create a reward system

Get-out-of-debt guru Dave Ramsey warns against giving kids an allowance and instead recommends that money given to a child should be tied to actions, like completing chores or other household projects. The idea is to get kids ready for the real world by emulating it with a system of compensation tied to work.

CFP Jeff Rose of Good Financial Cents says, “One of the first steps in teaching your kids financial independence is giving them responsibilities around the home that are both paid and unpaid.”

Ramsey is also a proponent of giving children the opportunity to earn more money in “commissions” when they find extra things to do or take initiative in solving problems around the house.

Teach them personal finance

Many kids are shocked when they get into the real world and finally begin grasping the finite nature of money. Mom and Dad spring for everything, so why would money ever run out?

Clint Haynes, CFP of NextGen Wealth, says there’s a fix for this. “Make it a point to sit down with your kids and show them what your budget looks like, how it works, and why it truly is the foundation to personal finance,” he says.

When your child asks for candy at the store, don’t deflect them with, “We don’t have the money.” Instead, let them know that the money you have available isn’t earmarked for candy, showing them how a budget works in real life.

Other lessons you can teach early on include those around saving, compound interest and even giving.

Brian Hanks, a CFP out of Idaho, has an experiment he urges his clients to conduct with their children once they are high school seniors. He suggests parents hand over their checkbook and have their kid cover all the family’s expenses for the entire school year.

“Paying a family’s bills is eye-opening, and your teen starts to develop new money habits,” Hanks says.

Let them earn real money

You can start by giving your kids an allowance that is tied to performance: completing chores, excelling in school, and having a good attitude can factor into their “compensation.” Be sure to enforce the association between what they do and how they are compensated. Once they can work legally, you can taper off their allowance.

Ed Snyder, CFP at Oaktree Financial Advisors, says children who have jobs will be more thoughtful about their spending and better with money in general. “Working will help them think through their spending and hopefully be more responsible,” he says.

Keep in mind kids don’t always have to wait until they are 16 to get a job. They can start a business or participate in gigs that allow kids under 16 to work with a permit, like modeling or acting.

Challenge them

Not only should your kids be responsible for expenses and make their own money, Eric Jansen of AspenCross Wealth Management says kids should be challenged in their money habits.

“Set up 90-day savings and spending challenges as a fun way to help them better understand and manage the trade-offs between spending money on what they want and what they need,” Jansen says.

No-spend or savings challenges are great ways to teach lessons about money while showing your child what they are capable of if they focus on their goals.

You can even create competitions among siblings, like seeing who can save the most money.

Trust the process

Sound like a lot of work? It is! Financial independence doesn’t happen overnight.

“Some of these [money] lessons may click sooner in some kids than in others — even within the same family,” says Snyder. “Don’t give up hope. … Just keep showing them good examples and teaching them good old-fashioned financial lessons.”

Be patient, be kind, and be confident that the lessons you are teaching them will serve them well into adulthood.

The post How to Raise a Kid You Won’t Have to Cut Off in 20 Years appeared first on MagnifyMoney.

What Should Your Teen Do With Their Summer Earnings

Source: iStock

According to a 2017 survey released by the National Financial Educators Council, 54% of respondents (all 18 years and older) said a course in money management in high school would benefit their lives. Another survey — the most recent from the Program for International Student Assessment — reports that only about 10% of U.S. 15-year-olds are proficient in personal finance matters, falling in the middle among the 15 countries studied. The message is clear: Young Americans need to learn more about money and managing it wisely. One way to start them off is giving them hands-on experience with their own money. Enter the summer job.

Having a summer job can be a good introduction to adulthood for many reasons: The discipline, submission to management, team work, and a regular paycheck are just a few of the things a teenager will get used to with their first summer job.

It’s also a good way to introduce kids to the real world of money. Though the money your teen earns is technically theirs, as a parent, you should use summer job earnings as an opportunity to help your kids form good habits with money. There’s no better time to show them the value of money than in the crucial years before they’ll be saddled with obligations like student loans, car notes, and mortgages.

Here are a few ways to make sure your teen will get the most out of their money-making experience that will keep them money savvy for years to come.

Pay their fair share

Once your teen begins making money, you’ll to want consider how they can begin to cover certain expenses. You’ll be tempted, no doubt, to let your teen keep their hard-earned money for themselves. Trust this process. If the goal is to raise money-smart kids who become even savvier adults, there will have to be simulations of the real world that include actually paying for things

If your teen uses the car, consider having them cover a portion or all of their car insurance bill. Another option is to have them contribute to their cellphone bill or even some of the Wi-Fi they use.

Having expenses is a real part of life, so it’s better to help them understand that now rather than later when ignorance isn’t so blissful.

If the thought of making your child pay for expenses bothers you, consider a different approach: Teach them about the costs of everyday life by asking them to cover their portion of a bill, but take that money and put it away for them. You can save up all that money and, as a nice gesture, give it to them when they need it most, like when they go away to college or finally leave the nest to launch out into the real world.

Open bank accounts

Source: iStock

While many families do not have access to or elect not to participate in the traditional banking system — it’s estimated that 27% of U.S. households are unbanked or underbanked — you’d ideally want to get your teen familiar with banks and how they work. Though check use has been on the decline since the mid-1990s, it’s still important for teens to learn how to write a check, along with keeping a checkbook register. Sure, this practice probably won’t last long, as electronic payments and money management apps continue to grow, but this approach gives your kids the gist of how to keep track of their cash flow.

While your teen has a bank account, you’ll also get them used to understanding how a debit card works. They’ll get familiar with how easy it is to swipe for things they want, yet how difficult it can be to replenish their account with the money they’re making at their job.

Finally, you’ll want to make sure that your teen opens a savings account. In most states, a person can open a bank account when they become 18. For younger teens, many banks have special teen or kid accounts that a child can share with their parents. Co-owned checking accounts can be opened as young as 13, while custodial savings accounts can be opened at any age.

Developing good habits around saving and managing money takes time and some getting used to. So using their summer earnings would be a perfect opportunity to get into the groove of budgeting for expenses and managing money through a bank account.

Set money goals

Once money starts to flow into your kid’s hands, seize the moment and get them to see the bigger picture. Summer money is great, but paying for life will take much more than what your teen earns from a few hours of work in a bike shop. Begin to show them the cost of things like college, cars, homes, and luxuries like vacations or hobbies.

Once you compare the costs with their summer job earnings, it should help them come to conclusions about how money works: The more you have, the more you can do. The idea is to inspire them to increase their earning potential with tools like education or savings to invest in income-producing assets.

Another result of these conversations could be your teen realizing they’ll want to start saving up for life sooner than later. They may decide to put away money for the purpose of paying for school or their first condo.

Ron Lieber, New York Times financial columnist and author of the book The Opposite of Spoiled, says parents should prompt their kids with an immediate goal like having a college fund. “The best thing to do is to use any earnings to begin a conversation with parents about college, if your teen plans on going,” Lieber says.

Lieber suggests questions to guide the conversation:

  • How much of your college expenses will be covered by parents versus the child?
  • How much have the parents saved for the child’s college expenses?
  • How much are kids/parents willing to borrow or spend out of their current income?

According to Lieber, “The answers to these questions may cause a teen to save everything, if they think it will help them avoid debt in their effort to attend their dream college.”

No matter how temporary their summer job is, you’d do well to use it as a springboard for more conversations about money. Whatever their long-term money goals are, it’s never a bad idea to start working toward them early on.

Learn compound interest

While your teen is making all of those big money goals, you could drive the point home with a lesson in compound interest. Using a compound interest calculator, you can show your teenager many scenarios where interest can either work for or against them.

Run scenarios around savings for big-ticket items versus financing them. The math will speak volumes:

*Example APRs are used. APR will vary on factors like individual credit score, loan amount, and bank requirements.

In the above scenario, you’d end up paying a total of $226,815 in interest. That same amount ($226,815) invested for 30 years with a moderate 3.5% return yields over $636,000!

Seeing these numbers in action should motivate your teen to start a savings habit that they will maintain throughout adulthood.

If they are really excited about the prospects of compound interest working on their behalf, encourage them to open their own IRA to begin investing themselves. This way, they’ll not only understand the theory of investing but also get hands-on experience with it. After all, the time value of money works even better when you’ve got more time. Investing as a teen could set the stage for copious returns later on in life.

Create a budget

Making money can be the fun, somewhat easy part of a summer job. Figuring out how to spend it can be difficult. Make your teen prioritize needs and wants by learning to create a budget. A good practice would be to have your teen make a list of things they’ll spend money on versus how much money they will bring in. You could also introduce them to a money-management app — here are some of the best ones.

This will help them understand the finite nature of money and how their current cash flow stacks up against their current earnings.

Have fun

According to Brian Hanks, a certified financial planner in Salt Lake City, “Don’t be concerned if your teen ‘blows’ a portion of their earnings on things you consider to be worthless.” Hanks goes on to say that it’s better to make money mistakes as a youngster: “Everyone needs to learn tough money lessons in life, and learning them as a teen when the consequences are relatively small can save bigger heartache down the road.”

A summer job should be fun and low-stress, but it can also be used as a learning experience that prepares your teen for the real world. If your teen turns out to be a terrible budgeter or extreme spendthrift, give them more than a summer to learn better ways. Remember, they’ll have the rest of their lives to continue grasping and mastering money concepts.

The post What Should Your Teen Do With Their Summer Earnings appeared first on MagnifyMoney.

7 Money Moves New Empty Nesters Should Make Now

Raising one child to age 17 costs a middle-income married couple on average $233,610, according to the U.S. Department of Agriculture.

Once your kids leave the nest, all of the money you spent feeding, clothing, and entertaining them is suddenly up for grabs. But if empty nesters don’t earmark their newfound savings for specific goals, it’s easy to fall into the so-called “lifestyle creep” trap — when your lifestyle suddenly becomes more expensive as soon as your discretionary income increases.

A 2016 study by Boston College’s Center for Retirement Research found that a couple collectively earning $100,000 per year should be able to put an additional 12% toward their retirement savings after their children fly the coop. But in reality, researchers found that same couple would only increase their 401(k) contribution by 0.3 to 0.7 percent.

Covington, La.- based certified financial planner, Lauren Lindsay encourages empty nesters to put their extra pocket money to work.

“In general, when people have money ‘available’ they tend to spend it and not even be conscious about how they’re spending it,” Lindsay told MagnifyMoney. “I think it’s really important to refocus our goals now that we are in a different stage and, hopefully, on that home stretch towards retirement.”

Lindsay says the empty-nester stage is a really good time to circle back and revisit your budget to focus and make a plan for your financial goals. “Depending on where you are in the scale of retirement, you could use the extra funds to pay off a car, pay down the mortgage, save towards a trip, fund the emergency fund, or other goals,” she says.

As a new empty nester, there’s likely an endless list of purchases and lifestyle upgrades your newfound savings could go toward. You may even think you deserve a new car or boat, or to go on a luxury vacation every year after 18 or more years of child-rearing.

You can certainly treat yourself if you’d like, but you should make sure to get your financial house back in order before celebrating your freedom.

Here are a few things you can do to make sure your empty-nest savings go to the right places.

Put a number on what you’re saving now that the kids are gone

You may not be aware of exactly how much money you are really saving now that there are fewer mouths to feed at home. Creating or revising your budget gives you an opportunity to see the numbers behind the decrease and adjust your spending to maximize potential savings.

Peachtree City, Ga.-based certified financial planner Carol Berger suggests new empty nesters take the opportunity to complete a cash flow analysis — either on your own or with a financial adviser.

“This will allow you to identify how much discretionary income you have and then develop a plan on how to use it,” says Berger. Tally up the reduction in your spending to get an idea of how much potential cash you could be diverting to your own financial goals.

Shrink your lifestyle

If you’ve spent decades shopping for a family of three or more, it’s hard to break that habit right away. You might still be shopping for more groceries than you really need, for example, and wasting money in the process.

It might be time to take an even bigger step toward minimizing your housing costs — downsizing. Not only could this reduce your overall housing costs, but it’ll give you an opportunity to shop around for a home that better fits your needs as you age or to consider a residence in an active adult community with homes and amenities designed specifically for those ages 55 and older.

Check out what you’re paying for utilities, too. While you may have needed the tricked-out cable package when your kids were living at home full time, you may not care about paying for premium channels any longer. Call your provider and negotiate a less-expensive package. Try using a service like BillFixers or Trim to renegotiate or cancel bills and features you may no longer have use for.

Review your insurance policies

The same goes for your insurance policies like car and health insurance. Under the current health care law, kids can stay on their parents’ health insurance plan until they turn 26. But if your adult child already has employer-provided insurance, you don’t need to pay for their coverage anymore.

Contact your employer’s human resources department to discuss removing members from your family plan, or switching to a lower-cost individual plan when you’re on your own. The same goes for any vision or dental insurance plans you may still be paying the family price for.

If you’re still paying for your child’s life insurance policy, you may want to speak with them about transferring the plan into their name or canceling the plan if they have access to a better one through an employer.

It couldn’t hurt to ask for a discount on your car insurance or switch to lower-cost coverage because the kids aren’t there to drive your car.

Put your newfound money toward any outstanding debts

Saving for retirement is important and paying off your outstanding debts should be your top priority. The interest rates on unsecured debts like credit cards are generally higher than any returns you’d receive on potential savings. So if you pay off your debts first, you’ll actually save yourself more money in the long run.

According to a 2017 Consumer Financial Protection Bureau report, the number of Americans 60 and older with student loan debt rose from 700,000 to 2.8 million individuals between 2005 and 2015. The average amount of student debt owed by older borrowers almost doubled during that time, from $12,000 to $23,500.

One of the worst things you can do for retirement planning is ignore past-due debts. If debts go unpaid for too long, you could see your wages or even your future Social Security benefits garnished. The same CFPB report shows the number of retirees who had their benefits cut to repay a federal loan rose from about 8,700 to 40,000 borrowers over the 10-year period.

Don’t sacrifice your retirement goals to pay for college

College has never been more expensive. But remember: Your kids can take out a loan for school and pay it off as their income grows. You can’t necessarily take out a loan for your retirement.

That’s why financial planners often advise parents not to put themselves at financial risk by sacrificing their nest egg to pay for their child’s college education — unless they can afford to take the hit.

“Many people believe that they must send their kids to college, and they pay a hefty sum for that — sometimes at the expense of their retirement,” says Oak Brook, Ill.-based certified financial planner Elizabeth Buffardi.

If you’ve covered your debts and have room to save more, you still have plenty of time to contribute to your retirement funds.

Let’s say a married couple has $200,000 already saved for retirement with 15 years left to go. They collectively earn $100,000 per year, and they have diligently been saving 15% of their monthly pre-tax income for retirement. If they double their savings to 30% — putting away $2,500 each month — and their investment grows at an average annual rate of 6%, they could have well over $1 million saved by retirement.

Plan for long-term health care needs

A couple retiring today will spend an estimated $260,000 on health care needs in retirement, according to Fidelity.

Think of what other health care needs you could have in retirement. Buffardi says she always asks clients if they are worried about needing long-term care in the future. While most workers will qualify for Medicare once they turn 65, Medicare does not cover all long-term care needs. If you know you have a family history of dementia or other age-related illnesses that may require long-term care, this may be a concern for you. You may consider taking out a long-term care insurance policy or setting aside funds in a regular savings account.

Learn to say NO

Even after your kids move out, they can still treat you like the Bank of Mom and Dad. They may come to you for a wedding loan or to ask you to co-sign something they can’t afford, like a mortgage. Even though their pleas may pull at your heartstrings, consider your own financial needs first.

The post 7 Money Moves New Empty Nesters Should Make Now appeared first on MagnifyMoney.

5 Things to Do Before Your Maternity Leave Ends

From one new mom to another.

No matter how much time you have home with baby before returning to work, it’s important to get as much out of your maternity leave as possible. Of course, maximum cuddle time is high on that list (along with napping as much as possible while baby is sleeping). However, there are a few other things you might want to add to your final to-do list to really maximize your time and feel ready to head to back to work.

1. Consider a Trip (Just a Little One)

While the idea of packing up your newborn and hitting the open road might seem silly, hear me out. The truth is, taking a trip, even a super-short one, will never be as easy as it is right now. For starters, you aren’t working, so you won’t have to ask for time off and be at the mercy of other colleagues’ vacations. Of course, your significant other is another story, but at least that’s just one person jockeying for time, not two.

Plus, newborns are the best travelers. They sleep most of the time, they ride for free on planes, and you won’t have to worry about keeping up with a crawling, walking, running toddler. (Of course, no matter where you plan to travel, run it by your kid’s pediatrician first.) If you can manage to pick a place that won’t stress you out, it’s a great time to start making family travel memories. Just plan for something low-key and relaxing. Bungee-jumping is probably off the menu.

2. Put Together Those Newborn Albums & Keepsakes

You probably think you’re too tired to spend hours on Shutterfly sorting through the hundreds of photos you take of your child a day to put together an album (speaking of which, we’ve got some ways to save on that here) — and you’re likely right. But consider how much more tired you’ll be when you go back to work. Plus, all those newborn memories are fresh in your mind, since you spend 24/7 with your bundle of joy, so you can write the most sentimental and memorable captions to go along with those tons of photos.

3. Figure Out Childcare

If you haven’t already, now would be the time to figure out who will watch your baby when you go back to work. In all honesty I waited too long — we didn’t post our ad seeking a nanny until three weeks before I was going to start working again. Finding the right provider for your child, or the right daycare setting, takes time, so if you haven’t started looking before baby was born, try to start as soon as you can once they arrive.

4. Take Time for Yourself

It’s great to have some plans for your maternity leave, but if nothing happens at all other than feed, burp, pump, rest, repeat, that’s more than OK. Some moms have plenty of extra energy to fill their days with closet reorganizations and daily park visits, while others feel more tired and are happy to just relax during any down time.

If you can muster even just a little extra energy though, it might be worth leaving baby with someone for just a couple hours at some point for some alone time. Go for a drive. Get your nails done. Grab a coffee and sit in the park. Whatever you decide to do and for however long you can, taking a little bit of time to rest and recharge by yourself will likely do your whole family a world of good.

5. Reassess How it All Went

Were you using your maternity leave as a way of helping you decide whether or not you would return to work once it was over? If so, be gentle with yourself if it didn’t go exactly according to plan. Taking care of a newborn is no joke, and doing it 24/7 is more than a full-time job, often filled with days where your only adult conversations are in the morning and/or at night when your significant other gets home from work. If you decide that staying home full-time really isn’t for you and heading back to work will provide you with the mental stimulation and creativity you crave, that’s totally fine.

Alternately, if you decide you will stay home, be sure to reassess what a new budget would look like without your pay, including things like where your health insurance will come from and how you’ll save for retirement. (You can get an idea of where your finances stand and how much debt you’re carrying by viewing your free credit report on Credit.com.)

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

Image: monkeybusinessimages

The post 5 Things to Do Before Your Maternity Leave Ends appeared first on Credit.com.

How to Make Moving Back Home Work for You

Moving back home doesn't have to be the end of the world. Here are tips for surviving and getting out.

I’ve moved back home with my parents twice: Once after college to work at a nearby internship and again after breaking up with the person I was living with.

My parents were, at least outwardly, cool about it both times. They never charged rent, which probably made me feel more guilty about mooching off them and spurred me to move out faster.

More than half of post-college millennials moved back in with their parents after college, according to a recent survey by TD Ameritrade. Not all of them have parents as cool as mine, and the mix of emotions involved with shacking up in your childhood bedroom can lead to tension. So if that’s where you find yourself, here are a few tips for making it work.

How to Prepare

Before you plan to move home, you should have a plan to leave, said Susan Newman, a psychologist and author of “Under One Roof Again: All Grown Up and (Re)learning to Live Together Happily.” Know how you will eventually move out and discuss a possible move-out date with your parents.

“It helps you focus a little more on your job hunt,” she said.

If you don’t have a job yet, don’t stress. Here are 50 things you can do to score your first job.

If the date passes, you can always reassess.

You should also talk about your schedule. When you were in high school, your parents might have expected you for dinner every night. Now that you’re an adult, if that’s not the case, you should have a conversation to reset those expectations so Mom doesn’t get offended when she makes your favorite dish and you’re at the bar.

How to Have a Social Life

While you may want to have friends or dates over whenever you want, you still need to respect your parents’ feelings, Newman said. After all, it’s still their house.

Kate Moore, a 26-year-old content creator with Precision Marketing Group, has lived at home for about two months. She said it’s best to establish boundaries on day one.

“You’re used to gallivanting around town at all hours of the night and returning when you felt like it,” Moore said. “Now that you’re back under your parents’ roof, you need to maintain a delicate balance between respecting their space and maintaining your freedom.”

If you expect to be able to come and go as you please, make that clear, but also promise to be considerate.

How to Avoid Clashes

If you had tension with your parents before you moved out, don’t expect that to go away this time around. Make sure to address it head-on once you move back in, Newman said.

For example, if talking about politics always leads to an argument at the dinner table, Newman suggests making clear that is an off-limits topic for both of you. If your parents have disagreed with you on certain issues your whole life, like your style, friends or politics, come to an agreement that you won’t let those issues come to a boil.

Some parents simply won’t listen. It can be hard for the people who taught you how use the toilet to treat you like a fellow adult.

“One thing that might help a lot of the time is to say to your parents, ‘Wait a minute, I’m not the little kid I was before and I really don’t like being treated like a teen who just got my driver’s license,'” Newman said.

However, that also means acting like an adult. Clean up after yourself and don’t expect your parents to do everything for you.

How to Avoid Feeling Like a Mooch

Moore said her parents charge her only as much rent as their utilities increased from her living with them. She said other people moving home should work out how they could contribute to the costs in bills and food they’re accumulating for their parents. Little gestures help, too.

“Sometimes I delight my parents by bringing home a case of paper towels or a gallon of 2% milk,” Moore said. “Small contributions to the greater household will go a long way.”

Don’t act like a guest, Newman said. If you don’t have a job, find other ways to help, like making dinner or mowing the lawn. Yard work for neighbors might also be a good way to earn some extra money.

How to Benefit

You’re not just getting free meals and discounted rent, Newman said, but a chance to spend time with your parents while you’re adult instead of a child they’re raising. Young people should take advantage of the opportunity to get to know their parents, in addition to paying off their student loans or building up their savings. (See how to lower your student loan payments here.)

“As a young adult, and as a parent who’s not racing off to the soccer field for the third game of the weekend, you have more time to talk,” Newman said.

How to Get Out

Whatever your reason for moving back home, whether it’s to chip away at student loan debt or to find a job, pay off credit card debt or simply to save money, it’s important to know what your monetary target is and make a plan for getting there.

Even if you don’t reach your goal by the the time you agree to move out, whether it’s six months or a year, your parents won’t necessarily kick you out if you’ve shown progress, Newman said.

Moore said a mix of rent prices in the area, student loan debt and credit card debt led her back home. Since moving, she’s paid off one of her credit cards. (Paying off a credit card means you’ll lower your credit utilization, and ultimately improve your credit scores. Having good credit scores can help you land better terms and conditions on things like an auto loan or mortgage. Want to see how your credit card debt is affecting you? Check out a free snapshot of your credit report on Credit.com.)

Young adults moving back home shouldn’t feel like they’ve failed, neither should parents whose kids haven’t quite left the nest, Newman said.

“You don’t have to feel guilty,” she said. A lot of young adults lean on their parents to some degree, even if they don’t move back home.

“My son still brings home his laundry,” she said.

Image: monkeybusinessimages

The post How to Make Moving Back Home Work for You appeared first on Credit.com.

7 Things You Can Do Now to Solidify Your Child’s Financial Future

There are plenty of things parents can do now to help set their kids down the right path financially.

If you have kids, or are considering having them, you’ve likely started thinking about what that will mean for your finances. But have you thought about how you can help your kids become prepared for their own financial future? There are plenty of things parents can do now to help set their kids down the right path financially. Here are a few.

1. Set up a College Savings Account

One of the most important things you can do is to consider how (and if) you’ll help them obtain a college education. An analysis of Labor Department statistics by the Economic Policy Institute found that in 2016, Americans with four-year college degrees made almost twice the average hourly wage compared to those without a degree. So a college degree is still important. However, you should never save for your child’s college at the expense of saving for your retirement. Instead, consider whether, and how much, you can responsibly save for both. (You can read this to help determine if a 529 college savings plan is the right avenue for you and this one about how much is enough when it comes to college savings.)

2. Have a Life Insurance Policy

Don’t think of a life insurance policy in terms of what would happen to your kid if you die. Consider it a way to ensure your child is taken care of in the future, no matter what happens to you. Talk to a certified financial planner if you aren’t sure where to start, or which option is best for you. (Or you can read this article that outlines seven essential documents to fill out.)

3. Put a Guardian in Your Will

Putting together a solid will so your child will be taken care of if something happens to you should be a top priority when estate planning. Picking the best guardian for your child is equally important. You can name two types of guardians — one to physically look after your child and one to look after their assets. Think seriously before simply naming your mom or best friend as your child’s guardian.

4. Open a Savings Account for Your Child

When it comes to helping kids become financially savvy, teaching them how to save — and why savings are important — is crucial. Your kid doesn’t have to be walking yet for you to open a savings account in their name. Ask your bank about a custodial savings account. Once your child is old enough for an allowance, you can discuss why everyone should have savings and how much to put away. Many experts say saving 20% of your income is a good way to build up a safety net.

5. Give Them an Allowance

Experts differ on whether giving kids an allowance helps them become financially savvy, how much to give and for what purpose (just to help them save, or in conjunction with chores, etc.). Research from T. Rowe Price, an investment management company, showed that children who receive an allowance are more likely to think they have a good understanding of basic financial topics than those who don’t get one. The important thing is to not give your kid an allowance and let him do with it what he will — you need to talk about money with your kid, as well. Discuss the importance of earning money and how to make it last.

6. Talk About Your Finances

Money is often a taboo subject in families, but it shouldn’t be. Consider talking to your kid about money early and often. A 2014 study from North Carolina State University and the University of Texas found that children pay close attention to issues related to money. Make sure you’re filling them in on the important facts. (View your free credit report snapshot on Credit.com to help see where you stand.)

7. Involve Them in (Certain) Financial Decisions

Your young child probably won’t help you save for a down payment on a new house or have detailed conversations about your debt-repayment plans. However, there’s no reason they can’t help put together a grocery list and come shop with you while you discuss how food costs money and the importance of family budgeting. Or perhaps on vacation, your kid can help decide how family money will be best spent on a few outings or can watch you fill up the gas tank to get an understanding of how much your road trip costs. Teach your kid early that it costs money to do fun things and how saving helps you achieve certain financial goals. You might be surprised how much your kid remembers later from your early — and repeated — money conversations in the future.

Image: szeyuen 

The post 7 Things You Can Do Now to Solidify Your Child’s Financial Future appeared first on Credit.com.

7 Things You Can Do Now to Solidify Your Child’s Financial Future

There are plenty of things parents can do now to help set their kids down the right path financially.

If you have kids, or are considering having them, you’ve likely started thinking about what that will mean for your finances. But have you thought about how you can help your kids become prepared for their own financial future? There are plenty of things parents can do now to help set their kids down the right path financially. Here are a few.

1. Set up a College Savings Account

One of the most important things you can do is to consider how (and if) you’ll help them obtain a college education. An analysis of Labor Department statistics by the Economic Policy Institute found that in 2016, Americans with four-year college degrees made almost twice the average hourly wage compared to those without a degree. So a college degree is still important. However, you should never save for your child’s college at the expense of saving for your retirement. Instead, consider whether, and how much, you can responsibly save for both. (You can read this to help determine if a 529 college savings plan is the right avenue for you and this one about how much is enough when it comes to college savings.)

2. Have a Life Insurance Policy

Don’t think of a life insurance policy in terms of what would happen to your kid if you die. Consider it a way to ensure your child is taken care of in the future, no matter what happens to you. Talk to a certified financial planner if you aren’t sure where to start, or which option is best for you. (Or you can read this article that outlines seven essential documents to fill out.)

3. Put a Guardian in Your Will

Putting together a solid will so your child will be taken care of if something happens to you should be a top priority when estate planning. Picking the best guardian for your child is equally important. You can name two types of guardians — one to physically look after your child and one to look after their assets. Think seriously before simply naming your mom or best friend as your child’s guardian.

4. Open a Savings Account for Your Child

When it comes to helping kids become financially savvy, teaching them how to save — and why savings are important — is crucial. Your kid doesn’t have to be walking yet for you to open a savings account in their name. Ask your bank about a custodial savings account. Once your child is old enough for an allowance, you can discuss why everyone should have savings and how much to put away. Many experts say saving 20% of your income is a good way to build up a safety net.

5. Give Them an Allowance

Experts differ on whether giving kids an allowance helps them become financially savvy, how much to give and for what purpose (just to help them save, or in conjunction with chores, etc.). Research from T. Rowe Price, an investment management company, showed that children who receive an allowance are more likely to think they have a good understanding of basic financial topics than those who don’t get one. The important thing is to not give your kid an allowance and let him do with it what he will — you need to talk about money with your kid, as well. Discuss the importance of earning money and how to make it last.

6. Talk About Your Finances

Money is often a taboo subject in families, but it shouldn’t be. Consider talking to your kid about money early and often. A 2014 study from North Carolina State University and the University of Texas found that children pay close attention to issues related to money. Make sure you’re filling them in on the important facts. (View your free credit report snapshot on Credit.com to help see where you stand.)

7. Involve Them in (Certain) Financial Decisions

Your young child probably won’t help you save for a down payment on a new house or have detailed conversations about your debt-repayment plans. However, there’s no reason they can’t help put together a grocery list and come shop with you while you discuss how food costs money and the importance of family budgeting. Or perhaps on vacation, your kid can help decide how family money will be best spent on a few outings or can watch you fill up the gas tank to get an understanding of how much your road trip costs. Teach your kid early that it costs money to do fun things and how saving helps you achieve certain financial goals. You might be surprised how much your kid remembers later from your early — and repeated — money conversations in the future.

Image: szeyuen 

The post 7 Things You Can Do Now to Solidify Your Child’s Financial Future appeared first on Credit.com.