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Ask Kim: New Baby & Finances

December 19, 2022 Q: Our daughter was just born. What should we be thinking about financially? A: Your question around what to think about money-wise shows great parental wisdom. A good start is to envision what you hope she will feel in her own relationship with money in her lifetime. No one wants their kids to be fearful or ill-equipped to handle their money, but we need to envision what we do want for them if we want them to be successful. Picture your daughter responsibly handling money with comfort, contentment, enjoyment and confidence, and take actions to help her make that happen. If it sounds like a lot for a new baby, it really isn’t. At this point, taking actions toward the vision you have for her is important, but not difficult. The good news is you don’t have to be a financial expert to set your daughter up for success. But I do recommend you spend some time learning about good money habits now. Most of us didn’t learn everything about planning, budgeting, saving, borrowing and investing while growing up. This is a great time to add to your own financial knowledge so you can benefit your family now and pass knowledge on to your daughter over the coming years. For now, here are a few tips to get you started: Start Saving Now If you haven’t already done this, open a savings account for her. Your daughter’s financial wellness will, necessarily, involve a habit of saving. Having a savings account in her own name for longer than she can even remember is a logical start. It normalizes this important step seamlessly for her. Up until she is a little older, the account provides you a place to put her gifts of money. That reminds me, it’s a good time to talk with family and friends about what you are trying to accomplish for her and how a gift of money instead of another toy is a great gift. Some gift-givers may be excited to be part of setting the saving example and welcome the ease. You might also consider a secondary savings account for long-term savings. And when the long-term savings balance grows, open a certificate to earn more interest. If you include her in all of this, even at a young age, and bring her to the credit union, she will get comfortable interacting with her credit union and learning along the way. Understand Your Education Savings Options Along with a regular savings account, you could also set up a 529 College Savings Plan now for her future education costs. With such a savings plan, your earnings are free from federal income tax when used for qualified college education expenses. You don’t need a lot of money to start a 529, and there are no federal gift taxes on contributions up to a set amount. You can find 529 plan specifics online, and your tax consultant can give you specific tax implications. Be a Good Financial Role Model Ensure you have or build an emergency fund of $1,000 or more. An emergency fund helps you avoid credit card interest expenses when a car repair, water heater or trip to urgent care is needed. Expect unexpected expenses. An emergency fund reduces your financial stress and models good habits for your daughter. When you take these actions now, you’ll create your own savings stories to share to help her own her money someday. Parents’ actions teach louder than our words. Congratulations on your new daughter. She is welcome to become a member of Summit Credit Union, a financial cooperative looking out for her, and her financial well-being. And feel free to check out our free financial learning resources at SummitCreditUnion.com to help kick-start your journey. You might also be interested in Q: Our daughter was just born. What should we be thinking about financially? A: Your question around what to think about money-wise shows great parental wisdom. A good start is to envision what you hope she will feel in her own relationship with money in her lifetime. No one wants their kids to be fearful or ill-equipped to handle their money, but we need to envision what we do want for them if we want them to be successful. Picture your daughter responsibly handling money with comfort, contentment, enjoyment and confidence, and take actions to help her make that happen. The holidays can be stressful & that’s why it’s important to prioritize your self-care. Use these tips to reduce stress without draining your bank account. As you prepare for this new chapter of your life as a parent, make sure you are saving to cover the costs of having a baby with our financial planning checklist. The kids will be heading back to school before you know it. Yes, it’s hard to think about backpacks and calculators when you’re swatting mosquitoes and soaking up after-dinner sunlight. But follow these tips to manage spending now and you’ll get to relax and enjoy the rest of summer. More than 25 percent of people in committed relationships admit they tend to avoid money talks. But whether you’ve been with your spouse for years or you and your partner are just starting to think about how your financial decisions affect one another, it’s empowering to talk about your money and financial goals. Ready to have the talk? If your to-do list is growing at the same rate your holiday budget is shrinking, your kids have a bad case of the “gimmes” and you’re wishing you could be just sick enough to stay in bed endlessly re-watching A Christmas Prince, there’s still time to slow this holiday madness down. ‘Tis the season of giving! Giving back doesn’t have to hurt your wallet. Find out how you can make a difference in your community this holiday season. Watching your parents get older is hard and it’s easy to put off having big talks about issues like their finances and end-of-life preferences. But if you don’t have those talks, you won't know how they’d like things handled and, frankly, you might not be able to help without a lot of legal hassles. Summer celebrations don’t have to break the bank. Our four-step plan means affordable holiday fun. Summer’s here, hooray! After months of cold and unexpected snow, it’s time to kick back and enjoy with some fun summertime celebrations.  But as you get ready to kick off the season, don’t leave your money smarts behind. Here are four steps that can help. 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