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Financial planning with young kids
Posted on 3/8/24 at 5:27 pm
Posted on 3/8/24 at 5:27 pm
I'm 35 with two kids under 4 and one in the hopper coming later this year. What are some financial tips you'd suggest for someone at my stage? Retirement-wise, we're sitting pretty good. I'm less concerned about meeting my current contributions as I am about protecting what I have. I know education is a big spend item I need to plan for, but what other suggestions does the board have related to finances that I should be thinking about right now?
This post was edited on 3/8/24 at 5:28 pm
8
Posted on 3/8/24 at 5:30 pm to RickAstley
What's your public school situation there?
Posted on 3/8/24 at 5:45 pm to RickAstley
IF they get jobs as teenagers, help fund their Roth IRAs.
IF they are really good students, scholarships could cover most of college.
529s have the most flexibility.
Don’t keep up with the Jones’s.
All the “chasing money and success in search of happiness” is mostly a waste of time. Your time is what the kids need most.
Constant activities and travel sports can soak up all available family time. Choose wisely. Things like golf, painting, handyman projects, and fishing can last a lifetime. Be together.
IF they are really good students, scholarships could cover most of college.
529s have the most flexibility.
Don’t keep up with the Jones’s.
All the “chasing money and success in search of happiness” is mostly a waste of time. Your time is what the kids need most.
Constant activities and travel sports can soak up all available family time. Choose wisely. Things like golf, painting, handyman projects, and fishing can last a lifetime. Be together.
Posted on 3/8/24 at 6:36 pm to RickAstley
Since the age of comprehension I’ve lectures mine on the topic of “Contrary to Your Mother’s Beliefs We Don’t have a Money Machine in the Poolhouse”
Posted on 3/8/24 at 7:13 pm to RickAstley
Plenty of term life insurance
Posted on 3/8/24 at 8:55 pm to deeprig9
It's not great. Honestly the public and private schools locally are at best mid-tier. We haven't figured out our plans for the kids schools yet, but we're saving in case we need to go the private school route. We're trying to make sure that we're teaching the kids what we can at home and not putting all of our cards in on the school system.
Posted on 3/8/24 at 8:59 pm to makersmark1
I appreciate your post.
My wife and I are pretty much in agreement we're not pushing our kids hard onto any one sport. I don't think we have the mental fortitude to do travel sports. We're going to let them try things out and see what sticks. Also, if any of our kids are athletically gifted, I might question the legitimacy of them being my kids because we both don't bring much to the table athletically.
quote:
Constant activities and travel sports can soak up all available family time. Choose wisely. Things like golf, painting, handyman projects, and fishing can last a lifetime. Be together.
My wife and I are pretty much in agreement we're not pushing our kids hard onto any one sport. I don't think we have the mental fortitude to do travel sports. We're going to let them try things out and see what sticks. Also, if any of our kids are athletically gifted, I might question the legitimacy of them being my kids because we both don't bring much to the table athletically.
Posted on 3/8/24 at 9:03 pm to AndyJ
We both have term life policies. Should I consider umbrella insurance or anything else that might help protect our current assets? I don't want to see the rug get pulled out from underneath me financially if one of my kids does something stupid.
Posted on 3/8/24 at 9:05 pm to RickAstley
quote:ChatGPT but it has good points. I’ll never poo poo ChatGPT for general info. It’s a start not an answer.
Given your stage in life with young children and another on the way, here are some financial tips to consider:
1. **Emergency Fund**: Ensure you have a robust emergency fund to cover unexpected expenses, ideally around 3-6 months' worth of living expenses. With a growing family, unexpected costs can arise, so having a financial cushion is crucial.
2. **Insurance Coverage**: Review your insurance coverage, including life insurance, health insurance, and disability insurance. Ensure you have adequate coverage to protect your family in case of any unfortunate events.
3. **Estate Planning**: Consider creating or updating your estate plan, including wills, trusts, and guardianship arrangements for your children. This ensures your assets are distributed according to your wishes and that your children are cared for by trusted individuals if anything happens to you.
4. **529 Plans for Education**: Start saving for your children's education expenses by contributing to a 529 college savings plan. These plans offer tax advantages and can help you save systematically for their future education costs.
5. **Budgeting and Saving**: Review your budget regularly to accommodate the expenses associated with raising a family. Set aside money for childcare, education, healthcare, and other family-related expenses. Automate your savings wherever possible to ensure consistent contributions to your savings goals.
6. **Retirement Planning**: While you mentioned you're in a good position for retirement, continue to contribute to your retirement accounts and review your investment strategy periodically to ensure it aligns with your long-term goals.
7. **Healthcare Costs**: Anticipate and plan for healthcare costs, including medical expenses for childbirth, pediatric care, and any unexpected medical emergencies. Consider contributing to a Health Savings Account (HSA) if you have a high-deductible health plan.
8. **Financial Education for Children**: Start teaching your children about money management from a young age. Incorporate lessons on saving, budgeting, and responsible spending into their upbringing to set them on the path to financial literacy.
By focusing on these financial aspects, you can help protect your family's financial well-being and set a solid foundation for their future.
This post was edited on 3/8/24 at 9:08 pm
Posted on 3/8/24 at 9:05 pm to RickAstley
Umbrella insurance is a no brainer if you have any wealth. $1M in coverage is around $200 annually.
Posted on 3/8/24 at 9:06 pm to RickAstley
quote:
My wife and I are pretty much in agreement we're not pushing our kids hard onto any one sport. I don't think we have the mental fortitude to do travel sports. We're going to let them try things out and see what sticks. Also, if any of our kids are athletically gifted, I might question the legitimacy of them being my kids because we both don't bring much to the table athletically.
Invest in three gaming PC's with all the upgrades and a $300/m gaming spend from their own allowances (which is your money anyway).
Posted on 3/8/24 at 9:17 pm to RickAstley
quote:Private school tuition can eat up savings faster than your kids eat a bowl of cereal. I hate it but we do it. It’s all an opportunity cost situation. $12-14k for two in private school in Louisiana is what we pay. Thanks to the boy for getting into magnet school we are at $6500 currently.
It's not great. Honestly the public and private schools locally are at best mid-tier. We haven't figured out our plans for the kids schools yet, but we're saving in case we need to go the private school route. We're trying to make sure that we're teaching the kids what we can at home and not putting all of our cards in on the school system.
This post was edited on 3/8/24 at 9:20 pm
Posted on 3/8/24 at 9:30 pm to TJack
sounds like a steal compared to our $21K/year daycare Posted on 3/8/24 at 10:01 pm to lynxcat
quote:COVID did a number on child care. It reverted many back to a single paycheck family with a parent home for kids bc the numbers just don’t work.
sounds like a steal compared to our $21K/year daycare
Posted on 3/8/24 at 10:42 pm to TJack
Thankful for a secondary paycheck that would typically be a primary HH earner. Otherwise, it wouldn’t make sense.
For OP, I think it’s important to take care of yourselves before anchoring in children. For instance, 401K match and HSA funding make a ton of financial sense. When you can, 529 is an effective investment vehicle. Roth IRA or conversion if you phase out. I don’t generally think children change the financial plan much outside of wills, ensuring insurance is adequate, and maybe a bigger emergency fund to cover unexpected expenses.
For OP, I think it’s important to take care of yourselves before anchoring in children. For instance, 401K match and HSA funding make a ton of financial sense. When you can, 529 is an effective investment vehicle. Roth IRA or conversion if you phase out. I don’t generally think children change the financial plan much outside of wills, ensuring insurance is adequate, and maybe a bigger emergency fund to cover unexpected expenses.
Posted on 3/9/24 at 6:09 am to lynxcat
quote:
For OP, I think it’s important to take care of yourselves before anchoring in children.
When people ask me about college funds in casual conversation I usually ask them about their life insurance situation. So many of them that are worried about college funds don’t have life insurance for themselves. . People have it in their heads that an important early step to parenting is setting up a college fund shortly after birth. Misplaced priorities.
Posted on 3/9/24 at 6:14 am to RickAstley
quote:
what other suggestions does the board have related to finances that I should be thinking about right now?
The first order of business, stop having more kids.
Posted on 3/9/24 at 12:11 pm to TJack
My wife just started working again after being single income for the last two years. We're already paying that amount for daycare annually. I'm on board with the education spend if we can be dual-income, but going down to single income will be hard to afford private tuition.
I've added up what we've paid in daycare the last few years and we definitely could've replaced a car with that money or bought a third one if we wanted.
I've added up what we've paid in daycare the last few years and we definitely could've replaced a car with that money or bought a third one if we wanted.
Posted on 3/10/24 at 9:21 am to RickAstley
One thing we did that has worked well for us (but we knew early in their teens where our kids were likely going to college): If/When you can afford it, buy a property near the college you think your kids will go, especially one within walking distance of campus. Rent it out until your kids need it. Once they are out, you go back to collecting rent, or sell it for a nice profit. The closer you are to campus, the more bulletproof you are in a real estate downturn. The value of the condo we bought in Auburn 6 years ago has more than doubled.
This post was edited on 3/10/24 at 10:16 pm
Posted on 3/10/24 at 3:00 pm to RickAstley
quote:
Should I consider umbrella insurance or anything else that might help protect our current assets?
Absolutely. Also look into additional accidental insurance (don’t recall the term) and a hospitalization plan. Those policies will cut you a check for broken bones, various imaging related to an accident, need certain types of medical treatments, overnight stays in hospitals…
Also look into critical illness policies
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