Author Topic: Financial Tips/Tricks for New Parents  (Read 642 times)

Nevaco

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Financial Tips/Tricks for New Parents
« on: December 07, 2020, 02:11:54 PM »
DW and I are expecting our first child! After lurking on this site for the past few years, we think we have most of the "basics" down (e.g., life insurance, wills & trusts, buying used, saving for retirement before working on college savings) but we are hoping the MMM community had some suggestions for 1) maximizing our financial resources once we add a third member to our family and 2) taking steps now to ensure our child has a solid financial base in the future.

Examples of opportunities we've found so far include:
- opening additional high-yield savings accounts (e.g., 5% on up to $1k in First Tech FCU's youth account)
- adding child as an authorized user on a credit card to build credit history (we pay ours off in full each month)
- tax adjustments (e.g., child tax credit, dependent care FSA)

Do you have additional ways we can maximize our existing financial resources? Are there other financial institutions with high-yield youth savings accounts? We look forward to seeing what creative ways everyone has found for children to help build the family 'stache!

mozar

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Re: Financial Tips/Tricks for New Parents
« Reply #1 on: December 07, 2020, 02:26:34 PM »
The Youtube channel "Our Rich Journey" talks about ways they teach their kids about finance.

skuzuker28

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Re: Financial Tips/Tricks for New Parents
« Reply #2 on: December 07, 2020, 02:46:24 PM »
If your kid can generate earned income, you can contribute to their own Roth IRA.

This is easiest if you have a business they can work for.  Filing, janitorial, etc. are all jobs they can do pretty young.  Just don't get greedy with the wage rate.  I've even seen them pay "modeling" fees for use of their kid's likeness in advertising.

Nevaco

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Re: Financial Tips/Tricks for New Parents
« Reply #3 on: December 07, 2020, 03:01:18 PM »
Thanks for the suggestions! A Roth IRA is definitely something to keep in mind. Neither of us has a business right now but I could see us starting a side hustle so that could be a great tool in our kit. As for teaching finance, we'll get to that once our child is a few years old. For now, we're primarily focused on ways that s/he can "help" without doing more than simply existing. :)

SimpleCycle

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Re: Financial Tips/Tricks for New Parents
« Reply #4 on: December 08, 2020, 06:06:26 AM »
For the dependent care FSA, if one of you hits the FICA cap and/or is above the highly compensated employee threshold and you both have a DCFSA, the DCFSA should come out of the lower earning spouseís paycheck.  The DCFSA amount is often adjusted down due to the HCE equity test.  And once you hit the FICA cap you lose the FICA savings on your contributions.

Iíve found the financial challenges of having children are on the spending side of things.  So the slight financial advantages they confer can easily be undone with one or two suboptimal spending choices.  Child care is the biggest line item by far when both parents work.  Nanny shares can sometimes cost less than infant daycare, but come with their own set of advantages and disadvantages.  Some people are able to figure out creative solutions in this area, but itís tough.

The food/dining out line item also often takes a hit when a little one arrives, because you are tired and have less time to be organized.  Definitely prep some freezer meals for the time around babyís arrival.  Lower your standards for what makes an acceptable dinner and youíll be less likely to order ďomg Iím so tired and hungryĒ takeout.  Also be sure youíre stocked up on high energy one handed snacks like trail mix and granola bars.  Breastfeeding moms need lots of calories.

Breastfeeding can save a lot of money but itís okay to formula feed if thatís whatís best for your family.  Cheap generic formula has to meet the same standards as expensive name brand stuff, so try the less expensive option first.  As a general rule always try the least expensive solution to any issue and revisit the more expensive options if the cheap one doesnít work.

Finally, be sure to continue investing in your marriage or partnership once your little one arrives.  A strong partnership is good for your childís well-being, and helps to keep finances on track as well.  Keep reviewing your goals, but also allow room for growth, change, and new hopes and dreams.

Good luck on this exciting new adventure!


WSUCoug1994

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Re: Financial Tips/Tricks for New Parents
« Reply #5 on: December 08, 2020, 09:37:44 AM »
We have a 4 year old and a 2 year old.  To be honest I think the best financial advice I can give you right now is that we buy literally everything for our kids on the used market.  From beds to clothes to toys to books (library is great and a fun trip with the little ones) - you name it.  Toddlers grow out of everything before they wear it out.  We do a ton of crafts and projects with our 4 year old and she just loves it.  Most of this stuff you can do on the cheap.  We also sell everything that we get so it is a nice circle for the wallet and the environment.

Day care/Pre-school - is expensive.  Crazy expensive where we live.  We haven't found a great solution for these.

seemsright

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Re: Financial Tips/Tricks for New Parents
« Reply #6 on: December 08, 2020, 10:04:16 AM »
We have a 10 year old. We are working with her to teach her systems. She gets a allowance every month. She has to save half to long term savings, she can spend the other half. But if she wants something that is more than her spending money she has to plan for it and save into short term savings. Along with this she has to track her spending and networth in a spreadsheet.

It is a work in progress. The best part of the month is she gets to take her money to the bank and put in a kid account that has very high interest rate. She tracks how much money her money makes in her spreadsheet also.

This is the kid that did not want to use a plastic returnable water bottle for a school project because it was worth 10 cents. So I think we are doing well.

skuzuker28

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Re: Financial Tips/Tricks for New Parents
« Reply #7 on: December 08, 2020, 11:01:24 AM »
We have a 4 year old and a 2 year old.  To be honest I think the best financial advice I can give you right now is that we buy literally everything for our kids on the used market.  From beds to clothes to toys to books (library is great and a fun trip with the little ones) - you name it.  Toddlers grow out of everything before they wear it out.  We do a ton of crafts and projects with our 4 year old and she just loves it.  Most of this stuff you can do on the cheap.  We also sell everything that we get so it is a nice circle for the wallet and the environment.

Day care/Pre-school - is expensive.  Crazy expensive where we live.  We haven't found a great solution for these.
Yes, used clothes are the way to go.  We were able to get a bunch for free from other parent friends who didn't need them anymore.  In our case I do think we are finding the wear limit on clothes, we he 3 daughters close in age and we are having to buy more new clothes for our youngest as the hand-me-downs are getting worn out after going through 3 to 4 kids.