8 Financial Moves to Make Before Your Kid Turns 5
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
Your kid’s college savings fund is something that’s easy to put off. But here’s the thing: The sooner you start, the more you’ll save, especially if you use a 529 plan. Because it’s a tax-free investment account, it can grow your money a whole lot faster than a regular ol‘ savings account — how’s an extra $40,000 sound?
But unless you’re a financial adviser, 529 plans can be tough to navigate. Thankfully, the U-Nest app takes all the guesswork out of opening an account.
U-Nest matches you with the best college savings plan based on your needs, then it takes all of five minutes to set up an account. Plus, it only costs $3 a month. No complicated fee structures, no lengthy paperwork, no in-depth research required.
Better yet, because it’s a tax-free investment account, it could help you save $40,000 more than a savings account would if you saved $200 a month starting from when your child was born. Even if you started when they’re 5, you could save an extra $15,000. (We used the U-Nest savings calculator for these estimates.)
Once your child is college-aged, the money can be used for college or trade-school tuition, housing, books and/or a new computer.
When saving $40,000 is this easy, why wouldn’t you do it? It takes five minutes to download the app and create an account, and you can start by saving as little as $25 a month.
2. 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.
3. Turn Those Crumpled Grocery Receipts Into Free Gift Cards
What do you usually do with your receipts? You check out, the cashier hands you a mile-long piece of paper, and you frantically stuff it to the bottom of a grocery bag. Pretty worthless.
But a free app called Fetch Rewards will turn them into gift cards. It partners with tons of brands to give you points for every grocery receipt you share. Then you can exchange them for gift cards for groceries.
This perfect for busy parents who don’t want to put a ton of work into this. All you have to do is send Fetch a photo of your receipt, and it does everything for you. No scanning barcodes or searching for offers — and you can use it with any grocery receipt.
When you download the app, use the code PENNY to automatically earn 2,000 points when you scan your first receipt. Then start snapping photos of your recent receipts to see how many points you can earn without a single trip to the store!
These free gift cards will become very valuable when your kid hits a growth spurt and starts eating everything in the house.
4. Invest 15 Cents in The Stock Market
Yeah, we know what you’re thinking: 15 cents? How’s that going to do me or my kid any good?
Well, that leftover change from your morning coffee and evening grocery hauls could turn into more than $1,000.
That’s what happened when Penny Hoarder reader Jeremy Kolodziej opened an investment account with Acorns. The app’s round-up feature bumps each of your purchases up to the nearest dollar and puts the spare change into the stock market, which helped him mindlessly save $1,076 in about 20 months.
“It’s a virtual coin jar,” he says. “You don’t even think about it.” He used the spare change to pay for two vacations.
Plus, Acorns invested the money for him, allowing him to grow his savings — without studying stock prices or managing trades.
It’s never too early to get kids started too. Explain what you’re doing and how their money will grow with them. Eventually, they can take more ownership of the process, and when they’re old enough, they’ll have a nice little savings to put toward something of their own.
The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.
5. Make Sure You Have the Right Car Insurance
Chances are, you know it’s entirely possible to find a better deal on some of your pesky monthly bills but what a hassle. What busy parent has time for that?
Here’s an easy one to start with, though: Car insurance. You should be shopping your options every six months or so. It could save you some serious money.
A company called The Zebra will do this for you. It makes it super easy to compare car insurance prices in a matter of minutes.
Take Lourdes Robles-Velazquez, for example. The single mom lives on a tight budget. She was paying $205 a month to insure two Toyota Priuses — hers and her daughter’s. By comparing prices, she knocked $80 off her monthly car insurance bill. That’s nearly $1,000 in savings per year.
Wondering how much you could save? Head over to The Zebra for a free quote. It takes all of two minutes.
6. 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.
7. Ask This Website to Pay Your Credit Card Bill This Month
No, like… the whole bill. All of it.
While you’re stressing out over your debt, your credit card company is getting rich off those insane interest rates. But a company called Fiona could help you pay off that bill as soon as tomorrow.
Here’s how it works: Fiona can match you with a low-interest loan you can use to pay off every credit card balance you have. The benefit? You’re left with just one bill to pay every month, and because the interest rate is so much lower, you can get out of debt so much faster. Plus, no credit card payment this month.
If your credit score is at least 620, Fiona can help you borrow up to $100,000 (no collateral needed) with fixed rates starting at 3.84% and terms from 24 to 84 months.
Fiona won’t make you stand in line or call a bank. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could save you thousands of dollars. Totally worth it.
All that credit card debt — and the anxiety that comes with it — could be gone by tomorrow.
8. Consider Quitting Your Job
As a parent, your list of expenses never seems to end. But there’s a great way for busy parents to earn up to $60 an hour working remotely — and on their own time.
Ben Robinson, a certified public accountant and business owner, will teach you how to become a virtual bookkeeper through his online course, Bookkeeper Business Launch.
And no, you don’t have to be a CPA to be successful in this business. In fact, all you really need are decent computer skills and a passion for helping business owners tackle real-world problems.
It’s helped thousands of people launch their own mini-businesses, including Daniel Honan, a military veteran and former painter who’s in his early 30s. He never considered starting his own company, but he signed up for Bookkeeper Launch, and now he’s making $50,000 a year keeping track of business expenses for his 10 clients.
It only took him three months to get started, taking one class a week. If you’re just a little curious, you just have to submit your email address here to take the first free class.
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder.