Spending & Saving Steps for Growing Families
This was part of an interview on the McGraw Milhaven Show with The Big 550 KTRS and our Chief Community Engagement Officer, Pier Alsup. Read the original article here.
New baby on the way? There is plenty of excitement with shopping and showers, selecting a name, and anticipating the date of birth! Welcoming a new baby is life-changing for any family. But a new bundle of joy doesn’t have to mean extreme changes to a successful financial future. Following are a few key spending and saving steps parents should take to prepare:
1.Review and revise your budget.
A new baby means new expenses … diapers, formula and food, clothes and toys, child care, and medical expenses, as well as education savings, will change your budget for many years to come! A growing family brings growing goals and growing expenses. A realistic budget is a key to keeping your financial health in check.
2. Check your emergency fund.
An emergency fund is a must, no matter what size your family. Never mind the fact that kids can be accident-prone, imagine tomorrow you’re driving to work and your two front tires fall victim to potholes and need replacing. Better yet, that the child-friendly living room furniture you have been eyeing is now on sale! If you have emergency savings, the “unexpected cost” of new tires will be only a minor inconvenience, or the “new living room furniture” will be your treat for years to come!
3. Start saving for your child’s education.
College is costly (and seems so far away), but it is more manageable when you start saving early! There are several options when it comes to saving for education, including the Coverdell Educations Savings Account as well as your state’s 529 savings account. Both of these accounts allow the earnings on your savings to grow federal income tax-free and are not taxed when money is withdrawn to pay for college expenses.
4. Keep funding your retirement.
Just as important as saving for college expenses is saving for your retirement. It may seem like a lot to think about, but continuing to save for your long-term plans is key.
Learn more about saving for retirement with our free, online Retirement module.
Advice for new grandparents:
Open a savings account for your new grandchild.
You can also consider adding to or opening a 529 savings or Coverdell Education Savings Account.
Pay for education directly.
If you are inclined to help with education expenses, consider paying the daycare, private school, and yes, eventually college directly. Paying directly for your grandchild’s education avoids gift taxes and will not potentially impact any financial aid for which your grandchild may qualify.
For more Money Matters tips and resources, visit www.togethercu.org.
Together Credit Union is federally insured by NCUA. Membership eligibility required.
