Tag: personal finance

Is your New Years Resolution in the toilet?

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So how are you doing on that New Years resolution!

According to AI and USA Today… January 10th is when most New Year’s Resolutions are abandoned. This usually happens during the second week of January. Wow! Apparently, it also has an official name, “Quitter’s Day”.

A little harsh if you ask me, but no one is really asking me….This week, the link to USA Today also informs us about the three most popular resolutions. These resolutions are to save more money, eat healthier, and exercise more.

What are most people doing wrong if they cannot even do this for more than 10 days? Let’s start with the goal of saving more money this year. Assuming you are not so far in the RED with your finances. If every dollar goes out to pay bills, you are in a difficult situation. That is a separate blog and a real struggle for many. IF that is not the case… go to your on- line banking app. and “AUTOMATE” Some amount of money EVERY month to the “savings” area you want to increase.

Maybe it’s only $25 or $50 but set it to be automated. Maybe you automate $50.00 a month from checking to savings and you have this happen on the same day each month. Use your birthday as that date, so you remember this will happen. If your birthday is on the 12th of any month, then a transfer is automated on that date every month. The automation occurs on the 12th of each month. This can be used for your 401K as well. Change the dollar amount of % you now contribute. Most of us can get access to the “dashboard” of our 401K’s.  Go in and up the % taken out each month.  If you do not have a 401k and your employer offers one… Sign up!!!! Once you’re in, automate an amount EVERY month and make sure you do not have it sitting in cash!  If this is over whelming CALL the company your company has the 401k with and TALK to someone! If you do this ONCE, you have completed your goal of saving more!

How cool is it that you can keep your resolution by just taking 5 min. to 30 minutes. to do just one of these tasks!!! Even a 1% increase makes a difference in the long run. Now a days there is no excuse for not setting it and forgetting it. The process is fairly pain free.  Maybe at the halfway point in the year you automate something else! Don’t think if I make a bad decision the first two weeks of the year, that’s it, I blew it. Nope, just re-group, start again. If you set a resolution that is too big a goal, it’s hard to stay focused. When you set small goals, it’s still a goal, and you should feel good about the accomplishments.

While we here… Lets think about the other two big resolutions.

To eat healthier… This is not always easy. I get it… Maybe you start cutting back on eating food from a BOX. aka processed food. I know I love a good box of Stovetop Stuffing too! It’s a start! As for the exercising more… Why is this so hard??? For me… not an issue, I need my endorphins! But I understand it is not for everyone. You can start with 10 minutes. a day you know. Ya go outside and walk for 10 min. EVERYDAY! That’s it. After a week or two,  go for another 10 minutes. later in the day. Look at you walking 20 minutes. a day!!! On the weekends grab a friend and get crazy and walk for 30 minutes. together! I know it’s winter. I live in New England; we get snow and temps. below zero with the wind. Walk in your house, set a timer and keep moving, maybe add a set of stairs. Just walk the stair, no need to run them.  Just NIKE it and JUST DO IT! 😊 This will allow you to meet your goals! Small goals and build from there. It’s still January. Even if it was June, there is still time to check those resolutions off the to-do list as done! You got this!!!! 

Your Emergency Fund, is that the right name for it you may ask?

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I was listening to a podcast this morning asking this very question. Well, I guess it really doesn’t matter what you call it. I think whatever “You” name it is what it is. The term “emergency funds” is not a comfortable term for you? That is fine, whatever works for you right? After all it’s called “personal” finance.

Building an emergency fund is crucial, no matter what you call it. It is the FIRST thing any financially savvy person would advise you to do. Most of us might get into credit card debt because we charge things on a card. This happens because we do not have the cash. I don’t mean just the small items we buy. Coffee here and there or lunch can certainly add up! The big stuff that is not part of your typical expenses. This is your deductible for a car repair or medical bill.

The refrigerator stops working. The faucet on the kitchen sink falls off in your hands. It happens at 9 PM on a Saturday night! Ya that happened! This is what an emergency fund or whatever you want to call it, is for! Life happens, and sometimes it’s very stressful! NOT having some extra cash to pay for these unexpected things makes it VERY stressful. In the long run, it becomes more expensive.

When I think of an emergency fund, I think of 3-6 months of expenses in accessible cash. This is what most of us consider necessary in case you lose your job. If your expenses are $3,000 a month then you have $9,000-$18,000 in savings. This is NO easy task to get to this point, and maybe you never get to a full 3 months. But it’s a good idea to try and worse case you have something to lean on.

This is not to say that you only spend this money IF you find yourself out of work! Your emergency fund, or whatever you name it, only has $200 in the account. I like to think of it as the de-stress fund.

But let’s say you get a flat tire and need to get it fixed so you can get to work. That $200 in the emergency fund can help you do that. This fund saves you from putting more on that credit card you are trying to pay down. How much you have in this fund is really a preference and what you need to be comfortable with. Remember this “fund” takes several months to build. It can take a year to reach your personal goal for the fund. Think of this “account” as a revolving door. Money will come out and the balance goes down. Next month, you cut out a few extras. You put that money into the emergency fund instead. The goal is to have money set aside for the “unexpected”.

And NO this is NOT what the “credit limit” or CASH advance on your credit card is for! It is NOT something you should use for your unexpected stuff! Assuming you can help it…That is NOT an emergency fund! IF this is what you use as the emergency fund, the odds are good this will spiral out of control. Everything we do related to personal finance takes time.  When you make minor changes along the way, they start to stack up. Now you have created a new positive habit. Whatever you call this special account really does not matter… Just work on creating one! Get through the first few months of building this account and trust me you will feel empowered.  It’s a new year, so get on it! Next year at this time, you will look back and see the progress you have made. The sense of calm this will bring you is undeniable.  Good luck, you got this! 😊

Kickstart Your 2025 with New Habits

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New Year, New Habits…???

Here we are at the end of another year!  Why is it that the end of the year is when most of us fall off the deep end and any bad habit we might have is now X10! You start the new year thinking you are going to eat better and be more mindful of your spending so you can save more! BUT we get to December every year and ALL that goes out the window! It’s Christmas Day 2024, and the day is not even over, heck the year is not even over, and I am ready to re-set!

I think I have had my fill of sweets and “grazing” on fun food people have delivered and or sent as a holiday gift. Don’t get me wrong, I love it ALL! That’s the problem. 😊

I am also ready to stop spending my money on all those last- minute stressed out, how did I forget about that person, gifts too. Too much stress! So today. Ok  maybe tomorrow, I will start getting back on my schedule with both food and budgeting. I am approaching 2025 with small steps each week or month to move in the right direction. I am making my to-do list, and I think I will actually LOOK at this list every couple of weeks, so that I can feel guilty IF I do not start getting things checked off this list! The list is the only thing that will keep me accountable, and it will help me work on my mental toughness. 😊 In order to keep the to-Do List reasonable and reachable, I will make the “items” attainable and not be too hard on myself if it takes a few weeks to do them.

I will stay focused on how great I am going to feel if I have one action item a month to complete and let’s say 6 or 7 get done by the end of the year and it sticks as a new positive habit! That would be amazing!

Some of the smaller items will be things like, cancelling a fairly new gym membership that’s just not working for me. I have decided I would rather stay at my old gym.

Another item on the to-do list is to investigate my husband’s cell phone rate. I think they are OVER charging him, a customer, for 10 years vs the current plans they offer existing customers. Cell phone companies lower the plan rates, BUT I think I must reach out to them and ask for that lower rate? Not really sure, but I need to check it out.  These little things you need to watch because they are banking on you NOT paying attention. It’s not nice. ☹Same goes for the Car insurance. I need to re-look at that too!

All these little things that take time and money out of our pockets because the mental energy we need to expand to get these tasks done is painful. The goal in 2025 is to push past this.

I tried this same thing last year, although I did not keep an actual list, I did make some small positive moves in the right direction that I am proud of, like increasing my 401K contributions each month and automating it. It was quick & easy and only a few % points, but it was done! I really did not notice the difference in my take home pay. I also cancelled 2 subscriptions; I was NOT using them.  

I was determined to save money on my cable and wi-fi bill too! Ok that one was very challenging and after 3 hours in the store, I lowered the bill by about $20.00 a month. My goal was $50.00 a month, which did not happen. ☹ BUT if I switched to that provider for my cell phone, I could save $80.00 a month, so I did! Hey, I was not leaving there after 3 hours of my time without a WIN!

Looking back, I guess I did make some positive changes in 2024, and maybe me and everyone else just accepts the fact that December is the one month we go off the rails a little. (key word here) and spend more money than other months, but we spend that money on family/friends and memories….  Enjoy the last week of the year and when setting 2025 goals, keep them realistic so that you can hit those goals and build on that!

Happy Holidays!!!

Is Employer Matching Going Toward Student Loans a Good Idea?

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At the beginning of 2024 there were some changes to the employer side of the 401k contribution and student loan repayment. Well, for some companies that now allow an employee to get their “match money” to not go into the 401K, but to go toward matching what the employee paid toward a student loan that year. EX. If an employer’s match for say 4% each year would have allowed you to have an added $3,000 contributed to your 401K, assuming you too contributed the $3,000 at a minimum, you could have that employer match of $3,000 go toward the student load debt instead. Of course, you too would have had to put $3.000 at a min. toward that debt as well. Remember it’s a match. Not every company will allow this, because I am sure it’s a human resource challenge this early on with this new rule. Regardless, is this a good thing?  There are several people dealing with huge student loan debt, and we hear a lot of conversation around it, like it’s not fair, its right and the government should forgive student loans for people taking jobs like teachers and social workers…

Hey, I get it! But we hear very little about “educating” people about financial literacy while in High School and how to make better choices as to the schools you go to. If you want to be a teacher, WHY would you go to a private college, assuming you are tsking out large loans.  They will not pay you more because you spent more. Remember State Colleges are supplemented with tax dollars, that’s why they are less money. Don’t think that makes them less of a school. I also know state colleges are pricy too these days, but at least in most cases they are half the cost. If you need to piece it together and start at a community college for 2 years, that’s OK! But to sacrifice those early years of funds in your retirement account earning compound interest? I’m not sure about that. Most people are what experts say “behind” on their retirement savings. Do most people not understand the  power of the longer your money is IN the market, vs the amount of money you PUT in the market? “The Money Guys” (Great podcast) https://moneyguy.com/  tell us for every dollar a 20-year-old puts in the market = $88 when they are 65! That’s AMAZING! I wish I was drinking that cool-aid when I was getting out of school! Of course, back in those days you had to give a blood and urine sample and swear on bible to get a student loan vs today. When my daughter was in school every Fall, she would get a “credit” on the bill which matched the Federal Student Loan amount each year. I would LOSE IT, and tell her, “Get down to that Bursar’s office and get that off!” I never checked that box on the FASFA! Here I am killing myself to fund that 529 plan for years, and they are giving “her” loans like candy! Thank God I was paying attention….Bottom line here, we need more education on the front end so people can make more informed decisions. Hey if you want to put blinders on and spend, spend, spend, in the early years and pick the most expensive college, Go at it!  But maybe while you are picking that high-priced college you can also decide what bridge you want to live under in your golden years. Just saying… Make good choice and control what you can control.

Your Net Worth…

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When you hear someone say, “what’s your net worth”?  Do you know what the definition of that question really is? AS to not assume, let us break it down to some basics… To calculate your net worth, add up all your “assets” first… If you own a house, what is the estimated current value, how much do you have in savings, as well as in retirement accounts, the value of your car… Let’s stick with the big-ticket items vs things like a diamond ring… Again, we are keeping it simple. The total dollar amount you get is what we call our “assets” for this conversation.

Now the fun part… You need to add up all your debts and subtract that from the asset total dollar amount you got.

 If you own a home and it’s valued at $500,000 BUT you still owe $200,000 on the mortgage… in the asset column under your home, the asset is valued at $300,000, because the bank “owns” $200,000 worth of that home.

If you have student loans, subtract that total amount, same with credit cards and any other debt/loans. If you paid $20,000 for your car and you still owe $10,00 just use the $10,000 vs the blue book value of the car, remember simple. Once you take your total assets subtract your total debt amount and this equals your “net worth.” Sometimes this number is a negative number… Don’t be scared… Its fixable.

 This article from Motley Fools gives a nice snapshot of the “average” Net Worth in the US by age, so you can see where you stand compared to others. Check out the whole article, it’s a good read!

Here’s the Average American’s Net Worth by Age in 2024 | The Motley Fool

For most things in life, average is OK, right? But there are some things in life where “average” is just that “average”. That does not mean it’s a good thing. Unfortunately, Americans do not seem to be good at saving, sad but true, just look at the numbers above. I would bet we used to be! Maybe we were not good at investing/saving because most people worked for companies with a pension.

Pensions are still out there, but they are always moving the needle. I know, because two family members have pensions. Still a great deal! But not like the old days… Maybe those number above scare me because I live in the northeast and its very pricey to live here. How do we encourage the younger generation that just saving a little extra in their retirement accounts in their 20’s makes a HUGE difference 30 years down the road, vs waiting till they are well into their 30’s. if you start in your 20’s the amount each month can be much lower than if you wait ten years.

They say the average car payment these days is over $700 per month for a new car and over $500 for a used car. The average credit card debt in the US is over $6500. Most people want a NEW house, or at least one that looks like the ones on HG TV! I do! Which is why I do not watch those shows… to depressing… ☹ We as Americans want instant gratification and want everyone to see how “successful” we are. Based on the numbers above I think it’s all a smoke and mirror show.

We all need to just squeeze a little more into the long-term investments so that we can take care of ourselves later in life. I am not saying we can’t have nice things but paying ourselves first with money into long term retirement accounts, and not OVER buying on the house and car will go a long way. Unless you plan on living in that nice new car in your older years??? 😊 Small changes make a big difference ten-twenty years down the road. Slow and steady and be aware of big purchases and make good decisions that are well thought out. We have all hade the car issues, the house issues…

What’s the goal here? Be above “average” on the Net Worth chart by just making small changes and nailing new good habits with automation and good decisions on the big stuff.

You got this! 😊

Financial Coaching. And the roll it can play…

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What IS financial coaching, you may ask? These days our lives are much more complicated than decades ago. In the “good old days” there was maybe a list of  6-10 ESSENCIAL monthly bills most people probably had.

Mortgage or rent, utility bill, homeowners’ insurance & car insurance. Maybe a car payment, property tax bill if it was not part of the mortgage payment.

Not much else, for EVERY Month bills. It seemed much easier to keep track of your monthly spending. Even credit cards were just used for “emergencies.”

These days, EVERYTHING is on “credit” or is a must Have! We borrow for college, we HAVE a cable bill, wi-fi bill, streaming services, cell phone bills to cover EVERYONE in the family. Maybe you have water delivered to the house vs drinking it from the tap. We eat more takeout food; we go out to eat more than years ago. We pay to have food delivered. We pay random people to pick us up and drive us places, we MUST have a credit card for MOST if not all of these things! Hey, I just switched my cell carrier, and to get the “deal”. Which did save me $100.00 a month, 😊You need to allow automatic payments on your credit card. They do not tell you that till the very end of the transaction, and it took 2 hours to get it set up! Long story, but at that point I was like, I just want out of here!

The point here is as a society we seem to “need” all this stuff.  Can you really survive without a cell phone? You need an App. for everything! I digress…

So, what does a Financial Coach have to do with all this? The world is busier, and we can easily go down a rabbit hole and overspend, which can lead to more debt than in the old days. A “Coach” is the person that helps you get your arms around your personal finance lifer. The “Coach” helps you face your fears, vs putting your head in the sand, thinking this will pass. It does not pass; it usually gets worse.  The “Coach” is that person that’s right by your side helping you make better decisions one step at as time. Money can be stressful when there is not enough, or when you are having a hard time changing your habits. People have life coaches, why not a  coach that helps people make changes in their financial life? People pay a coach to “force” them to work out or get on track with better eating habits. It makes sense, right?

It’s a thing! And I think it would be a cool gig to be part of! Talking to people about how to help them de-stress over money and help them create a feeling of being in control. I think I may do this!

Do you spend more on vacations than most?

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Do most Americans take vacation each year? Not just take vacation days from work, but an actual vacation.  Seems like it’s important to most people.  I get that, life these days is demanding and fast paced. Work stress is higher than it’s ever been and the cost of some of our necessities, like insurance, food and taxes has certainly gone up.  Yet a vacation is something most people put on their must have list.

According to Forbes. 40% of Americans plan to travel in 2024. 40% of Americans Plan to Travel More In 2024 Vs. 2023 – Forbes Advisor. The younger generation will travel more than others.  Is that a good thing? Probably… It’s a catch 22. Travel more when your young and healthy. Or older when it might not be as easy to travel? Maybe it’s something we just need to balance better. Balance as in the time and the cost. Real vacations build memories, and great experiences. It’s a way to spend time with family or friends and experience new things, or just unplug and relax with no schedule.

The average American will spend about $4.000 in 2024 on vacations. Maybe that’s one trip or two small trips. But its important to take some time away from the day to day grind and get away.

Maybe you drive to your destination vs fly, whatever works for you….

So where do we get the money for a vacation?  Maybe we plan ahead and squirrel some money into the savings account over a few months to get a chunk of the money set aside BEFORE you book the trip. The scary part is IF you put it all on a credit card and you do not ALLREADY have the money to pay that card off ASAP.  Booking a vacation usually requires you to pay with a credit card and that starts to add up quickly! It’s like doing all your Christmas shopping with a credit card. Then you wake up when you get home from that trip stressed, when you see your statement!  According to JD Powell, 51% of Americans carry a credit card balance. Survey: Many Americans aren’t paying their credit cards in full (yahoo.com)

So, while a vacation is well needed by most and let’s face it life is short, so lets do fun things and work that into our lives!  We also need to work it into our budgets. So, we make some cuts here and there or pick up extra hours with a side hustle, or something. Let’s find some extra coin in the budget to do fun things! But let’s book it when we know we have the cash to pay for it with no regrets!

The Sweetness of a ROTH IRA

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The Sweetness of a ROTH IRA:

We all know we need to be putting money away for retirement. Most people just use their pension plan or their 401K plan at work. BUT if you are eligible for a ROTH IRA account, it’s worth having one! Does this make you a luck person? Well, I guess it depends on how you look at it. To be eligible, there are income limits.  If you file single for tax year 2024, your modified adjustable gross income needs to be under $161,000. Filing married that modified adjustable gross income needs to be under $240,000. IF you gross more than those amounts… Well then, you’re LUCKY! 😊

The Max amount per year you can contribute in 2024, is $7,000 per person if you are under the age of 50. If you are over 50 years old the max per person is $8,000. Check out the link from Schwab for more details.

Roth IRA Contribution Limits | Charles Schwab | Charles Schwab

What so great about having a ROTH? Do we need one if we contribute to our 401k plans?

I would say yes! Here is why. As we get older and decide we are ready to start taking money out of our retirement accounts to live on, we DO have to pay taxes on this money if it comes from a 401K, 403b, traditional IRA.  Really anything that is considered a PRE-TAX IRA. PRE-TAX means we have NOT paid any taxes on the money that got to hang out in those special accounts growing on compound interest. Uncle Sam wants his money! When we are retired, we still pay taxes on our income, for the most part anyway. Some states have some great tax breaks but let’s keep this conversation basic. Better to be pleasantly surprised at tax time in your retirement days, than surprised in a bad way.

A ROTH is money you put in an account that you have from a say, payroll check and instead of putting in in your savings account you put it in a ROTH IRA account. This account grows TAX FREE, with COMPOUND interest, and you NEVER pay a tax on it!!!! Did you get the word NEVER!!!! How SWEET is that! That’s our reward for not being high earners but let’s take the win here!!!

When it comes time to use any of our money in retirement it’s nice to have three buckets to pull from. This is where a tax accountant comes in handy.  But let’s deal with that WHEN we/you get to that point, as those pesky tax laws change all the time.

Bottom line, IF you have money in say a 401K, and a ROTH, and Social Security, this could help you have 3 spots to pull money out of each month and keep the taxes pay much lower.

Seems like a good idea to me! You do not need to max out these accounts every year either to make an impact on your bottom line 20-30 years down the road. Think about it and get on a ROTH IRA calculator to see if that motivates you to take some action. This simple calculator from Bankrate is great! Roth IRA Calculator | Bankrate

 If you do pull the trigger, or already have a ROTH, make sure the “assets are allocated” based on your risk tolerance, and don’t leave it in CASH.  CASH does not grow. You got this!

What does it mean to be financially literate?

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We hear this term a lot these days. In general, most people are fairly “educated”. In the US a person can get a free education till the 12th grade, which in most states you have till your 21st birthday, to complete. Which is fair. Beyond that age… Well that’s a different topic all together.

MOST people are “literate” when they leave school, in general, or at least we hope so.

But school does not make us financially literate, not even a little. I thought school was supposed to prepare us for the real world. Yet it does not teach us ANYTHING about real adulting.

Did they teach you how to balance a checkbook in math class? NO! Yet they told us we needed algebra!  Understanding how a mortgage works or carrying a large balance on a credit card, or what compound interest is, would have been helpful back in those early days, instead of finding out the hard way. That’s how most of us start to figure things out. 

Not to mention how much simpler life was before the internet and you could not see how “great” everyone else’s life “IS” or appears to be. Banks did not just say, hey you make $50,000 a year, you DESERVE this $500,000 house, and we are going to give you the money for it, even though you only have $15,000 (aka 3%) to put down.

What always drove me crazy about this “low down payment’ thing, is HOW will you afford the monthly payments, IF you could barely save the down payment? Then the banks started making people pay PMI. Which was such a joke, because they made YOU the buyer insure your own loan in case you defaulted. NO risk for the banks. People were getting mortgages that had NO idea what they were signing up for. The bank or mortgage company is NOT the one that should tell you how much you can afford for a house, this is something WE should know/decide, as it’s different for everyone. But most people just go with “the bank said we qualify for more than we asked for!” Let’s get the bigger house! After all the bank said we could! The bank is running a business, they don’t care about you. No, they don’t teach us this in school either.

Same deal with credit cards. You get close to your max on a credit card, and you make at least your min. payment, They UP your limit. They want you to carry a balance, it’s good for their business.

These basic things are not taught in school, they are not discussed in most homes, well unless you are wealthy. The wealthy people DO talk to their kids about money, so they grow up in most cases knowing more than the rest of us. And those are just the basic things, never mind that scary word… “investing”! Rich people stuff, right?

The average midclass person looks at investing like it’s a form of gambling. Again, not the wealthy people, that is how they got wealthy!

When it comes down to it most people ARE NOT financially literate, and we need to change that.

Check out these stats from Moneyzine in the attached article.

US Financial Literacy Statistics 2024: Key Demographics & Cost (moneyzine.com)

 Our kids deserve to be educated and make better decisions early on in life vs learning the hard way which ends up wasting so much money that they will work so hard for.  There are many ways to get a better understanding about how money works these days. We have the internet, books, podcast….

As adults we have the power to be more educated about money, so we can make it less tabu for our kids. If the kids are of high school age or older, hey you can do it together! Be honest and upfront and tell them, we are going to learn together! 😊 You got this! Dig in, one topic at a time that you want to know more about. You might find you dig the subject! 😊

Talking to our kids about money

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Talking to our kids about money…

There is extensive evidence on how people’s emotions and feelings around money are shaped by the actions we see, hear, and feel pertaining to money when we are kids. Our fears, our habits and our anxiety around money usually comes from experiences we had as children. No pressure here on us parents! Like our job as parents is not hard enough! Ok so let’s break it down.  Perhaps we need to put some rules in place like trying not to argue about money in front of the kids when they are young? Easier said then done…

When money is tight, it’s stressful, and the kid’s associate money with a tense situation and learn to “fear” money or think they just need more money and it will all be ok, right? As adults we know this is not always true. More money does not make all the problems go away, if the habits don’t change and we spend more than we make.

So how do we fix this? We know we need to slow our roll, create budgets, and cut back on the non-essential items… Ya, Ya, Ya…We all know what we NEED to do.

The issue is how do we not create kids that have fears or bad habits around money?

Money does NEED to be discussed and it should not be hidden from the kids. They do not need all the details of course but we do want them to appreciate money, respect money and understand the “value” of money. We also need to teach them money is earned as well, which I think makes it have more “value”.  When you “work” for your “cash” and you think you want a new toy or something, usually that toy is taken better care of when the kids pay for it themselves. Trust me, I have witnessed it firsthand with my own child over the years.  I’m not saying they have to work for ALL their toys. 😊These are the things our parents probably did with most of us as well. Sometimes as parents we “give” too much to the kids, even if we don’t have the money. It’s OK to sometimes say NO, or not at this time.  We don’t need the kids to think there is no money, just that money is not like a faucet that has an endless flow of money.  Social media has played a role in kids thinking they need to have what everyone else has! You can just say NO.

Maybe it’s Ok to show the kids the bills, like the electric bill and why we shut lights off when leaving the room.  Opening a savings account for your children say between the ages of 7-12 or so is always fun. Make sure they are with you when you set up the account and the rule is they MUST put 15% of any money they earn or are given as a gift, into the account first. Then they can do what they want with the rest. This will help them get in the habit of “paying themselves first”. Not a bad idea to also encourage them to donate some of that money to a charity here and there.  Once the kids are in high school or have a “paying” job, lets play it safe and for this conversation, they have a W-2 job working part time, you could consider opening a custodial ROTH IRA for the child. Keep in mind once they are 18 or 21, depending on your state laws, it’s their IRA now, so do go over the rules with them in detail. Custodial Roth IRA: Your guide to Roth IRAs for kids | Fidelity

Once they start high school. And college is on the horizon, you MUST talk about money! College is expensive! Even state schools can run as high as $35,000 per year! As parents we want to do everything for our kids, including paying for college. But it’s not always possible and this again is a time when it’s OK to say NO to some things. Maybe it’s NO to the most expensive college they picked, due to little or no aid. The budget is important here. If college debt is going to be more than what they will earn the first year out, might want to re-think the school choice…. Student loans are ok but keep it LOW! Show then the online calculators and how interest calculates! It’s 4 years of their lives, do they want to pay for it for 10+ years. Student Loan Calculator | Bankrate

 If we talk to the kids throughout their lives about money and make it an open conversation maybe when it comes to large expenses like college, it will be an easier conversation? Discuss not spending more than you make, discuss paying yourself first, aka the 15% in the savings account, discuss investing and retirement accounts, show them your retirement account statements… Let’s talk money with our kids!