How to Avoid Frustration While Planning Your Family's Finances

Planning Your Family's Finances

How much does it cost to raise a child? Over $233,000 for one born in 2015, according to the US Department of Agriculture, and that doesn’t even include college. At first, that figure seems way off, but then you take a closer look at what you have to pay for — education, medical care, food, clothes — and it all makes sense. Being able to afford all this takes careful financial planning, which should begin now. Here are some tips to help you along the way.

Know Your Worth

A surprising number of adults don’t know how much they own in assets, yet it’s vital in being able to protect your wealth, plan for future goals, and pay for unexpected expenses, says one financial writer at NerdWallet. Of course, having children only makes it more important. To put a dollar figure on your wealth, you’ll need to add up the value of everything you own, from cash to stocks to fixed assets, the most important being your home’s worth. There are plenty of websites where you can find out how much it’s worth, but for a more precise estimate, you may want to ask a real estate agent for a competitive market analysis

Cut Expenses

Don’t be too upset if your net worth is less than you’d expected. There are ways to increase that figure, and the simplest is to reduce your expenses. Unfortunately, that may mean canceling an expensive vacation or eating in rather than at a fancy restaurant. Of course, sacrificing these pleasures isn’t so hard if you’re doing it for the welfare of your own child. Get in the habit of performing a cash flow analysis that breaks down income, bills, spending, and savings to get an accurate idea where your money is going. Once you have a budget, stick to it.

Prepare for Emergencies

So where do you put those extra savings? At least some should go into a bank account set aside to pay for the unexpected -- and there’s plenty of that once you’re a parent. Something as small as falling off their bike could send you into financial limbo, as would a faulty transmission or damage to your home. How much to put in depends a lot on your lifestyle, but the general rule of thumb is enough to live on for between six to 12 months, accounting for all your expenses, including student debt and your mortgage.

Save for Their Education

Another part of those savings should go into a college fund, as the price of higher education has risen to over $20,000 a year for in-state residents at public universities, reports CNBC, and there’s no indication that figure will decrease. The most common place to park your funds for this expense is a 529 plan, which is a tax-advantaged account sponsored by a state agency or educational institution. To set one up, you’ll need to contact the company operating as the administer in your state and do some research into what type of plan works best for your family.

Choose the Right Insurance

This can be a little bit difficult to sort out, as around half of working-age adults receive coverage from their employer, and these plans often extend to spouses and dependents. As a couple, have a close look at what your policies offer and take it from there. Bear in mind that in some cases, it’s actually more cost-effective for both of you stay on your respective job-based insurance while finding a private policy for your child. In addition, they may be eligible for government assistance such as Medicaid or the Children’s Health Insurance Program. It’s a smart idea to get an umbrella policy as well if you don’t already have one. Umbrella policies start at $1,000,000 and cover bodily injury to the other party should you get into an accident or someone gets injured at your home. For $200-$300 a year, it's worth getting an umbrella policy to protect your assets.

Now you’re on your way to providing for your child’s needs while maintaining a decent standard of living. If you do it right, there may be enough left over for a trip to Disneyland.

HR Brief October 2018

HR Brief  October 2018

Don’t Shortchange Your Employees’ Financial Literacy

If you think your employees are prepared for retirement, think again.

Less than 40 percent of American workers feel like their savings are on track for retirement. In fact, 25 percent have no retirement savings at all, according to the Report on the Economic Well-Being of U.S. Households.

HR Brief August 2018

Ageism: Are Your Employees Affected?

It turns out 60 percent of older employees feel discriminated against due to their age, according to a report from the Equal Employment Opportunity Commission (EEOC).

However, only 3 percent of those employees say they submitted a formal complaint about age discrimination. The EEOC report says this indicates underreporting of the issue.

Health Plan Enrollment Rules

Employers that sponsor group health plans have some different options available to them for designing their plans’ enrollment process. When it comes to enrollment, health plan sponsors should have rules in place regarding:

  • When employees can enroll in the health plan;

  • When employees’ elections for group health plan coverage take effect; and

  • What method is used for making elections. 

The Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act (FMLA) is a federal law that provides eligible employees of covered employers with unpaid, job-protected leave for specified family and medical reasons. For example, under the FMLA, eligible employees may take leave for their own serious health conditions, for the serious health conditions of family members, to bond with newborns or newly adopted children or for certain military family reasons.

Americans with Disabilities Act (ADA) – Wellness Program Rules

Many employers offer workplace wellness programs as a way to help control health care costs, encourage healthier lifestyles and prevent disease. There a number of federal laws that impact the design of employer-sponsored wellness programs, including the Americans with Disabilities Act (ADA).