When you become a parent, your finances completely change. Expenses are added, new considerations for the future are needed and its time to make sure you are prepared for what may come your way!
Summit Credit Union offers an array of financial services (from lending and banking to insurance and investments) and also focuses on giving back to our community.
Amy Crowe, a Financial Education Specialist at Summit Credit Union, has answered some of the most commonly asked questions that new moms have when it comes to finances.
Q&A with Amy Crowe, Financial Education Specialist at Summit Credit Union:
Q: What should I be doing about life insurance (when we have a baby)?
A: If you already have life insurance, be sure to add your child as a beneficiary and decide whether you want to bump up the amount of coverage – your current policy might not be enough. If you don’t have life insurance, now’s the time to add it. A new little someone is counting on you! You may be able to get affordable protection through work – check with your HR department to learn more and be sure to investigate whether their plan includes voluntary dependent life coverage. If you don’t have life insurance at work, or you just want to learn more about your options, Summit’s here to help. Visit our website at SummitCreditUnion.com or give us a call at 800-236-5560. We’d love to help you protect your new family.
Q: Should I set up a will?
A: It’s a good idea and can help you avoid problems in the future. I’d also recommend looking into estate planning and guardianship. There are many ways to tackle these issues, ranging from online wills to working with a professional estate planner. Do some research and determine which options are available and what’s the best fit for your needs. Already have a will? Good for you! But a big life change like a new baby is the perfect time to make sure your existing will still meets your needs.
Q: How much should I aim to set aside in an emergency fund?
A: If you don’t have any savings, start with one month’s worth of living expenses. Make it a priority to cut spending and save for this as quickly as you can. It might be painful in the short term, but it’s really critical to have this cushion. Once you’ve done that, keep saving on a consistent basis, until you have 3-6 months of living expenses in an emergency fund. To make sure you don’t run out of paycheck before you fund your savings, pay yourself first. Set up automatic transfers that move funds right into savings as soon as your paycheck hits. One last tip: Put these funds in certificates of deposit or money market accounts to earn more in interest.
Q: Any advice on budgeting for basics?
A: Here’s a trick that many people find helpful: Track expenses for one month. And we mean track everything, down to those lattes and the money you spend on parking. Divvy it up into categories (we have a great tool that can help, Summit’s Climbr®, available in online banking) so you can see exactly where your money is going every paycheck. Are you spending on needs, wants or a combo? Be honest with yourself and figure out how to cut spending to achieve your big-picture goals.
Q: What about big expenses like childcare? How can I work that into my budget?
A: Use our budget worksheet available in the Money Smarts section of SummitCreditUnion.com to create a budget that includes your childcare expenses. This is an Excel worksheet with two columns, one for living expenses now and one for the future when you have childcare costs. Then, you can reduce or increase line items until you create a budget that works for you.
Q: Should I open a 529 for college?
A: Education is expensive! Anything that lets you build up funds over time is valuable, so 529 accounts are definitely worth investigating. One of their biggest benefits is that they make it easy for family members to contribute to the account online. Summit Financial Advisors can help you determine which college savings options might be right for you – set up an appointment online at SummitCreditUnion.com.
Q: When should I open a savings account for my child? When should I start teaching him/her about money?
A: The answer to the first question is easy: Open an account as soon as your child has a Social Security number. Money is a common new baby gift and having an account that’s set up and ready to go makes it easy to start building a nest egg for your child. In terms of when to start teaching, experts recommend starting as young as two or three with simple lessons about coins and buying things – grocery trips or meals out are great places to start talking about how money works. Children as young as five can understand the concept of an allowance and the save, spend, give model is a great way to give them some control, which really helps them learn about money.
Financial Education Specialist at Summit Credit Union
Amy Crowe is a Financial Education Specialist at Summit Credit Union where she started her career in marketing over 20 years ago and now leads its award-winning signature community financial education programs, Project Money and Project Teen Money. A personal finance expert, Amy spends her time writing, speaking, developing learning content, and educating about money. Her thoughts, ideas and advice have been featured on television, in print and online magazines, on podcasts, at conferences and on expo stages. Amy is passionate about illuminating the connection between mindset and money behavior, and empowering others to make breakthrough changes that result in financial transformation. This passion led her to being named a 2016 CU Rock Star by Credit Union Magazine, the publication of the Credit Union National Association.