7 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 seven smart money moves before your kid turns 5. Heck, you can do many of these by the end of today!

1. Secure $1 Million in Life Insurance for Just $5/Month

Have you thought about how your family would manage without your income?

“The biggest mistake I see millennials making is being duped by insurance salesmen,” says Andy Yadro, a financial planner with Googins Advisors in Madison, Wisconsin. “Everyone needs insurance, but a very small subset of young people need the insurance that is sold by most ‘financial advisors.’”

You might still consider a basic life insurance policy, which can be useful if you have loved ones who rely on your income — a significant other, a child or even a relative you help out financially.

If you’re under the age of 54 and want to get a fast life insurance quote without the medical exam, pushy sales calls or even getting up from the couch, check out Bestow. The company is built around one concept — helping you get the term life insurance policy you want, simply and fast.

It just takes five minutes to answer some basic lifestyle questions, and you can get quotes for up to $1 million in coverage without a medical exam. If you’re approved, you can personalize your coverage to fit your budget. You can change or cancel your plan at any time.

2. Make Sure You Have the Right Car Insurance Policy 

Your life changes when you become a parent. Suddenly, most of your old needs and worries seem so small. You’ve got a child now, and the most important thing in your world is making sure they’re safe. Plenty of people start shopping for cars with better safety ratings, but you should also take another look at your auto insurance.

This is a smart time to shop around and do some comparing to make sure you have all the protection you need. A free website called The Zebra will do the shopping for you in just two minutes. 

Just enter basic information about your car and driving history, and it will compare prices and policies from more than 100 companies to find you the best price.

The Zebra says it saves its users up to $670 a year. What’s better than that, though, is peace of mind.

If you find a policy you like, you can sign up online instantly.

3. Get Free Gift Cards When You Load up on Groceries

A pre-school age girl walks alongside the shopping cart at the grocery store with her parents.
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As your kid gets older, you’ll probably notice your grocery bill go up and up. They’re growing fast and need the fuel. Plus you’ve got to plan for their school lunches — every parents favorite chore, right?

But what if you could turn your grocery receipts into free gift cards? That’s be nice, right?

It might sound too good to be true, but a free app called Fetch Rewards will turn your grocery receipts into gift cards. It partners with tons of brands to give you points for every grocery receipt you share. Then you can exchange the points for gift cards to places like Amazon, Walmart, Chipotle and dozens of other retailers. 

And it’s perfect for those of us 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 — you’ll be well on your way to your first gift card.

So next time you’re packing lunch for your kid, think about all the things you can buy with an Amazon gift card.

4. Earn Some Extra Income — on Your Own Time

As a parent, your list of expenses never seems to end. You could always use some extra money for something. But you’re raising a kid. The concept of free time is almost laughable.

But there’s a great way for busy parents to earning up to $60 an hour working remotely — and on their own time.

Bookkeeper Business Launch is an online course that teaches others to become virtual bookkeepers. Its founder, certified public accountant Ben Robinson, says you don’t have to have 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 a great opportunity for parents who want to work part-time, millennials who are just out of college and anyone who wants to bring in real money while working from home.

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 (ahem, most of the time), 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% goes toward essentials — yup, that’s your kid stuff.
  • 20% goes toward financial goals — think: that emergency fund.
  • 30% goes toward personal spending — this is basically your catch-all category.

6. Start a Virtual Piggy Bank

This is like a modern-day version of a piggy bank. But instead of having your little one add spare nickels and dimes into a miniature farm animal, use a tool called Acorns.

Its round-up feature bumps each of your purchases up to the nearest dollar and puts the spare change into the stock market. This is a great way to teach your kid the basics of saving and investing.

It’s never too early to get started. 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.

That leftover change adds up faster than you’d think.

Penny Hoarder reader Jeremy Kolodziej opened an investment account with Acorns, 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.

The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.

7. Finally Pay off Lingering Credit Card Debt

When you think about how much debt you have, you might feel a little anxious. You’ve got a family to take care of, after all.

A lot of us are being crushed by credit card interest rates north of 20%. If you’re in that boat, consolidation and refinancing might be worth a look.

A good resource is Fiona, a search engine for financial services, which can help match you with the right personal loan to meet your needs.

Fiona searches the top online lenders to match you with a personalized loan offer in less than 60 seconds. If your credit score is at least 620, its platform 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.

Take, for example, Katherine, who faced $12,000 in credit-card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $12,000 in interest.

If she’d kept on the same road, she would have paid something like $14,000 in interest alone over 25 years. Yikes.

So even if you’re simply curious about what’s out there, know that checking rates on Fiona won’t hurt your credit score — and can probably save you in interest.

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