There are so many decisions to make when raising children. From school choice to extracurricular activities to how to pay for college, there are many forks in the road. But arriving at your destination is far from impossible and the following tips will help steer you in the right direction.
Article
Getting Your Baby Ready for College
Between diaper changes and sleep training, the last thing on a new parent's mind is their baby's higher education. But that could be a costly mistake down the road.
etween diaper changes and sleep training, the last thing on a new parent's mind is their baby's higher education. But that could be a costly mistake down the road.
It's never too early to start planning savings for your kids' college education. After all, college isn't getting any cheaper. In fact, it cost more than $24,000 per year for students to attend in-state public colleges in 2015 and about twice that amount for private schools, according to The College Board. What's more, if you factor in inflation and multiply those figures by the four to six years it takes students to graduate, you'’re talking about some serious coin.
Saving for college may feel overwhelming, especially when your kids are young and college feels really far into the distance. But taking steps now can reduce your stress down the road. Here's what you need to do:
Start early. Money that you set aside while your child is young is particularly valuable since it has the ability to compound over time. Moreover, giving yourself a longer time horizon allows you to put some of the cash into the stock market; if the market goes down in the short term, you'll be able to recover those losses before your kids are even thinking about SATs or scheduling college visits.
Be realistic. While most parents would love to pay for their children's entire education, considering the high cost of college today, that's often unrealistic, especially if you have more than one child. You don't want to sacrifice your own financial goals, like saving for retirement or having an emergency fund, in order to save for your kid’s education. And you don't have to—nearly nine in 10 freshmen received some form of financial aid in 2015, according to the National Association of College Business Officers. While your child can take out student loans to make up for any future shortfall, there are no loans to cover you in retirement should you run out of money.
Open a 529 account. One of the best ways to put money aside for college is to use a 529 account, which is specifically designed for that purpose. Money placed into a 529 account grows tax-free, and you'll pay no tax on withdrawals as long as they are used for a qualified educational expense. Keep the money in your name (but designate your child as the beneficiary) in order to get the most favorable treatment when schools are making financial-aid offers.
Although there are no federal tax breaks for money that you put into a 529 account, some states do offer credits for contributions. If your child ultimately decides not to go to college or doesn't need all the money in the account, you can change the beneficiary to another family member. (However, if you end up not using the money for education at all, you'll need to pay taxes and a 10 percent penalty on its growth.)
Make it automatic. Rather than leaving it up to you to proactively put money into the 529 account, initiate automatic debits so that a set amount goes directly into the account each month. You can either do this via your bank or ask whether your employer will redirect a portion of your paycheck into the college savings fund. Seamless transfers mean you won’t see the money leaving your account each month and you will adjust to living without it more easily.
Get help. Friends and family love to send gifts when new babies arrive. Set up an account with an online college savings registry like GradSave or GiveCollege, which make it easy for well-wishers to contribute cash directly into your child’s college savings account.
Article
The Best School for Your Kid
Most parents would agree that they want to provide the best possible education for their children. But the question lingers: What's the best possible method of providing that education?
ost parents would agree that they want to provide the best possible education for their children. But the question lingers: What’s the best possible method of providing that education?
Some parents feel strongly about the value of a public school K-12 education, while others tout the merits of private school or would prefer to homeschool their children. Each option has benefits and drawbacks as well as an associated cost. Read on for a quick look at the pros and cons of school choice available today:
Traditional public school
PROS: In most regions of the country, the public schools are locally zoned, so your child will be in school with neighbors. Many schools provide free transportation to and from school. There is no cost beyond your property taxes. Because they have larger budgets and large school populations, these schools typically offer the widest array of extracurricular clubs and sports.
CONS: The best-performing academic schools are often in the areas where it costs the most to live and where property taxes are the highest. Unless you’re moving, you usually have no control over which school your child attends.
Charter school
PROS: Charter schools receive public funding (which means you won't pay tuition), but maintain the focus and selectivity of a smaller institution. This characteristic can make them a wise option for families who don't think that their zoned public school adequately meets their needs. What’s more, charter schools have the flexibility to implement alternative education models and focus less on standardized test scores.
CONS: Due to their smaller size and high demand, it can be difficult to get into a charter school. In some communities, charter schools offer a less diverse community than mainstream public schools.
Secular private school
PROS: Many private schools offer students more amenities than public schools and may have a greater focus on academic rigor and college prep. Class sizes tend to be smaller than those at public schools, and parent involvement is strong.
CONS: Tuition is expensive. The average cost per year is more than $22,000, according to the National Center for Education Statistics, although many schools do have financial aid programs. You generally have to apply to private school and admission to the best schools is highly competitive. Usually there are no programs for special-needs students, although some private schools cater exclusively to that population. The pressure to perform academically can be intense for some students.
Religious school
PROS: If you feel strongly about passing your religious value system onto your children, religious school will do that. Religious school tuition is less than half the cost of secular private school, and class size tends to be smaller than public schools.
CONS: Religious schools may lack diversity. They may have limited budgets for extracurricular programs and activities. You'll usually have to provide your own transportation.
Homeschool
PROS: You'll be able to customize an education program (as long as it meets certain state requirements) based on your family's interests and needs. The growth in online educational programs makes it easier to provide a broader education for kids learning at home. You can set your own schedule without being locked into a traditional academic calendar for vacations and holidays.
CONS: Your child will have less social interaction with peers, and the teacher (usually a parent) will have less time for work or other non-school related tasks. Creating an appropriate curriculum can be a challenge if you have children of different ages. The price of textbooks, supplies, online academic programs, and participation in non-school based athletics or other activities can add up quickly.
Listicle
10 Financial Moves Every Parent Must Make
It’s easy to let some important personal finance tasks fall through the cracks, especially for young adults. Once children come along, however, it's time to stop making excuses and start getting your financial house in order.
t's easy to let some important personal finance tasks fall through the cracks, especially for young adults. Once children come along, however, it's time to stop making excuses and start getting your financial house in order. Here are 10 money management tips for every new parent:
1. Add your baby to your health plan. You have 30 days to add your child onto your health insurance plan, but doing so as soon as possible after birth will avoid paperwork hassles later for doctor visits that should be reimbursed.
2. Update your beneficiaries. Whenever you have a major life change like getting married or having a baby, it's important to go through all your financial accounts to make sure that the right person or people are named as beneficiaries in case something should happen to you. Be careful about naming minors as direct beneficiaries, however, since they won't be able to receive the money until they become adults. A better option? Work with a lawyer to create a trust for your children and name a trustee to manage the account on their behalf.
3. Prepare a will. No one likes to think about their own death, but creating a will is the only way to insure that your wishes are followed with respect to who would care for your children if you were to pass away. You can designate one person to care for your children and one (they can be the same person) to make financial decisions on their behalf until they become legal adults.
4. Buy disability and life insurance. Having the proper insurance will insure that your children are taken care of financially no matter what happens to you. Even if one parent doesn't survive, you should consider life and disability insurance to cover the cost of hiring someone to handle the household chores and childcare currently handled by that parent.
5. Fund your dependent care FSA. If you're planning to send your child to daycare and your employer offers a dependent care flexible-spending account, you can deposit up to $5,000 pre-tax dollars into that account to cover the cost of eligible childcare expenses.
6. Build up an emergency fund. It’s even more important to have three to six months' worth of expenses set aside when a baby arrives to protect yourself from a financial shock such as a serious illness or loss of a job. Create a separate account for this fund so you're not tempted to dip into it, and set up payments to transfer into it automatically.
7. Claim your tax credit. Families making less than $110,000 can claim a $1,000 tax credit for each child under age 17 who lives with them and is dependent on them financially. Single parents making less than $75,000 can claim the full credit.
8. Open a 529 account. It's never too early to start saving for your child's education. The earlier you start setting aside money, the more time it has to compound and grow. Money in a 529 account grows tax-free, and you won't pay taxes on withdrawals as long as they're used for qualified education-related expenses.
9. Don't neglect your own retirement. While you're adjusting your budget to account for all of the expenses of a new baby, be sure to maintain (or add in) retirement savings for yourself. This practice will benefit your kids once they're grown, because they won't have to worry about your financial security in your senior years.