5 Financial Moves to Make Before Your Kid Turns 5

A father takes a break from his work to play with his kids.
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Life gets busy, especially with a kid under 5.

You go from sleepless nights to messy mealtimes to curious toddlers to, suddenly, tiny humans who talk and have (very strong) opinions. Then, before you know it, they’re in school.

At this point, you definitely know how expensive kids are — we don’t have to tell you that. But we wanted to check in: How are you feeling financially? As your kid gets older, you’ll face even more expenses (e.g. school activities, clothes, food, etc., etc.).

Before you get too overwhelmed, make these smart money moves before your kid turns 5. Heck, you can do many of these by the end of today!

1. Add an Extra $40K to Your Kid’s College Fund

Add an Extra $25K to Your Kid’s College Fund

Does it ever frustrate you that the super-rich can get their kids into any college they want, meanwhile the rest of us are left wondering how to even afford next semester’s textbooks?

But just because you’re not a millionaire doesn’t mean you can’t use some of the same strategies the super-rich use.

Here’s a secret of the rich: They save their money tax-free. With an app called UNest, you can take advantage of that same strategy, which, by the time your kid is ready for college, could mean $25,000 more than you would save in a regular savings account.

New to all this? UNest will hold your hand through the whole thing. It makes it super easy to get started saving as little as $25 a month in one of its tax-free investing accounts. UNest even lets you invite friends and family to contribute to the plan for birthdays, holidays and other special occasions. It’s super easy to use, and those gifts will continue to grow in value, thanks to years of compound interest.

When saving an extra $25,000 is this easy, why wouldn’t you do it? It takes five minutes to download the UNest app and create an account.

2. Set up an Account That’ll Tell You How Much You Can Afford to Stash Away

It’s always important to have an emergency fund, and it’s especially important if you have kids.

But saving money isn’t the easiest. It’s often difficult to know exactly how much you can afford to spare. And remembering to transfer money into your savings account each week? Forget it.

But a free app called Dobot from Fifth Third Bank will handle everything for you.

Dobot analyzes your spending habits and determines exactly how much you can afford to put away. Every few days, it’ll automatically add money to your Dobot savings stash. (You can also do this manually, if you want.)

And if rent is due soon? No worries. Dobot’s algorithm is designed to not overdraft your account. It only moves small, safe amounts. Plus, you can access your money whenever you want.

It only takes a few minutes to get started. Just download Dobot, connect your checking account and create a savings goal.

3. Cancel Your Car Insurance

 

When was the last time you compared car insurance rates? Chances are you’re seriously overpaying with your current policy. 

If it’s been more than six months since your last car insurance quote, you should look again. 

And if you look through a digital marketplace called SmartFinancial, you could be getting rates as low as $22 a month — and saving yourself more than $700 a year. 

It takes one minute to get quotes from multiple insurers, so you can see all the best rates side-by-side. Yep — in just one minute you could save yourself $715 this year. That’s some major cash back in your pocket.

So if you haven’t checked car insurance rates in a while, see how much you can save with a new policy.

4. Leave Your Family $1 Million in Life Insurance; Rates Start at $5/Month

Have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school?

Now’s a good time to start planning for the future by securing a life insurance policy.

You’re probably thinking: I don’t have the time or money for that. But your application shouldn’t take more than about five minutes — and you could leave your family $1 million with a company called Bestow.

Rates start at just $5 a month, and you can change or cancel your plan at any time. Plus, the security of knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam, pushy sales calls or even getting up from the couch, get a free quote from Bestow.

5. Check in With Your Budget

At this point, you know how expensive it is to raise a kid. Yes, it’s totally worth it, but it’s important to keep tabs on your budget, especially because, as your kid grows, your expenses likely will, too. (Think: After-school activities, clothes and sports.)

Keep tabs on these new expenses as they pop up so you can keep your budget updated accordingly. And if you don’t already have a budget? We like the 50/20/30 budgeting method. It’s super simple.

Here’s how you’ll allot your income:

  • 50% of your monthly income goes toward living expenses. These include rent, mortgage, utilities, groceries, car payments, gas and loan payments.
  • 20% of your monthly income goes toward money goals, which can include investments, savings and debt-reduction payments above the minimum amount.
  • 30% of your monthly income goes toward personal spending. That’s everything else.

Use this budgeting method to keep yourself accountable and on track to hitting your financial goals.

Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder.