Having Kids? Here’s How to Plan for Real Life


Whether your babies are just a dream or have made their great debut, planning for their future is likely your top priority. Here’s how to get started.


Plan with Today’s Budget in Mind


You already know your current salary and expenses. What you don’t know is how either of those may change in the future. As you’re starting your savings plan, consider where you are now. Don’t assume that you will be able to save more because you plan to get a raise future. If you do wind up with a significant salary increase, then you will already be used to living one way and can direct your financial windfall toward paying off debt or fattening your emergency fund.


Don’t Neglect Your Own Needs


One of the worst things you can do for your children is to fund their education but fail to take your own future needs into account. While paying for their degree is an admirable goal, if you have nothing left once you have bought the cap and gown, they will be the ones obligated to take care of you financially in your golden years. The Merrill Edge personal retirement calculator can help you figure out how much you’ll need to live comfortably depending on the age you plan to retire. Hint: It’s a lot more than college.


Set It and Forget It


The single easiest way to save money without budgeting is to simply have it transferred out of your account before you ever see it. Check with your bank about creating an automatic transfer on a recurring schedule. Each time you get a raise, up your amount so you learn to live without a higher income. If you can save just $50 per week, you’ll have nearly $8,000 at the end of three years. You can use this money to pay off debt, fund a 529 college savings plan, or invest. Check out Business Insider’s review of the best college savings plans.


Look for Ways to Save


There are plenty of ways to save dollars and cents that will add up in the long run. As an added bonus, many of the things you can do around your house are also environmentally friendly and will teach your children responsible stewardship. Installing high-quality storm windows and energy-efficient appliances, for instance, will save money off your monthly utility bills. Other small actions, such as reducing your water consumption, insulating the attic and garage, and fixing air and water leaks, will further lower your homeownership costs. Check with your cable and internet providers once each year for new specials, which can help you hold on to $600 or more each contract period – enough for at least a few freshman textbooks.


Avoid the “Overdo It” Personality


One huge mistake many new parents make is over-indulging their children’s wants and needs. Not only does this teach them that they can have anything they want, but it’s also wasteful and can put a strain on your wallet. Avoid the temptation to have the best of everything. When it’s time to buy a new vehicle, choose used. A used car or truck will have already depreciated, meaning you’ll lose less if you ever sell it. Buying a new home should be purchased with the same logical approach; however, depending on market conditions, it may be less expensive to purchase land and build. If your children grow up accustomed to living moderately, they will become adults who do the same.


These ideas can get you started, but talk to your financial advisor or local bank. These professionals can help provide you with personalized service and the most up-to-date information on investment accounts and savings strategies.



Starting College – Credit Card Tips For You

CollegeParents hope for a better life for their kids and it starts with helping after high school. Along with newfound independence come new experiences and unknown responsibilities. One of the most important talks that should be had before young adults venture out on their own is how to manage money and especially how to handle credit. An in-depth conversation will prepare them for the eventual struggles that we all experience and help them set the stage for a secure financial future.

Many of the tips you should share may seem obvious but don’t make the mistake of leaving them unsaid because you think it’s simply common sense. Common sense is defined as a basic ability to perceive, understand and judge things, much of which is acquired through the experiences of others. Share mistakes you’ve made and explain how easy it can be to get into trouble but encourage them that there are corrective measures, if they’re committed to turning a bad decision around to protect their financial future.

Teach your young people that cash should be the main source of funding, if at all possible. Living within their means will prevent the accumulation of debt that will be difficult to pay off on a fixed income and a burden when they move into the real world after graduation. If a credit account becomes a necessity, limits must be put in place to only use it to finance absolute necessities when sufficient cash is unavailable or cannot be secured in any other way.

When Credit is a Necessity
The fact that borrowing on credit can be costly is a fact that everyone needs to understand but especially young people who may be more impulsive in their spending. How monthly interest is calculated should be demonstrated using simple math equations and how interest compounds should be explained. The importance of having a lengthy credit history and a high credit score should be stressed.

Lesson #1: How you handle a credit card will affect your future in ways that may not be obvious now. Over time everyone establishes a credit history that reflects how well they handle money. This information is collected into credit reports that are used to calculate your credit scores.

Lesson #2: Handled with care a credit card can have a positive effect on your credit scores.
Lenders use your credit scores to decide whether to approve an application for a mortgage, automobile loans, personal or other types of loans. Mismanage a credit card by maxing out your credit limit and making late payments, and the often, repeated advice to young people to avoid using credit will prove true. If, however, you’re responsible and conscientious in paying the balance in full each month and on time, the benefits to your credit scores and the ability to get credit in the future will be vastly improved.

Lesson #3: The financial success of life on your own lies in taking a genuine interest in the details. Whether you’re choosing a bank, investment firm, employer, credit card or anything other situation that deals with money, what are vital to understand are the details in the fine print. With credit cards, the terms and conditions of each agreement vary and can mean the difference between reasonable and outlandish charges incurred for the privilege of borrowing. Fees and rates can add up quickly.

Factors that should be examined to make a wise decision when choosing a credit card:

  • Annual Percentage Rate (APR): Look for a low rate; a high one will cost more.
  • Annual Fees: Rates range from $25 to $300. Look for a no or low fee card.
  • Penalty Fees: Pay late and you’ll be charged a maximum $25 fee. Go over your credit limit and pay another fee. A penalty rate increase can be imposed for late payments of more than 60 days and remain in effect for six months. Make three late payments and you’re stuck with the penalty rate.

Lesson #4: Using a credit card responsibly takes discipline and commitment. Limit yourself to one card for purchases you can pay off when the bill comes due. Never use a credit card for an impulsive purchase; if you can’t afford to pay with cash, you simply can’t afford it. Frivolous spending will result in an out-of-control balance that may be hard to pay down. Carefully examine every billing statement for errors before making the each payment on time.

Anyone under the age of 21 is required to have a co-signer or proof of sufficient income to make the payments before being approved for a credit card in their name. Sit down together and compare a number of student card offers and teach them how interest is calculated and the debt trouble that can ensue if care isn’t taken.

The Last Word
If your child pays attention to even half of the advice you offer, they’ll be ahead of their peers trying to navigate without any guidance. The right information and your willingness to oversee their efforts in learning to manage their own finances will help them avoid the hardship of learning the hard lessons on their own.