March 4, 2020
Last week I was running around like a crazy person, which sometimes feels like it’s becoming a regular occurrence. One day after I got home from my office I was still finishing up a few loose ends, making dinner, getting one kid ready for art class and another one to sit and do their homework, I actually caught part of an episode of Ellen because the television is always on in my house (remember how much I love the tv?!). Now, I actually happen to love Ellen. She is funny, witty, and full of compassion. These are qualities I definitely admire in people! On this particular day she had Kristen Bell on her show – another one of my favorite celebrities! And Kristen was talking about her company, Hello Bello, and the products they sell to people who have babies and small children.
Now, if you think there is nothing free in this world, you are not correct! Did you know that Hello Bello will give new parents a weeks’ worth of free diapers? I would’ve bent over backwards for any free diapers when my kids were born! All you pay is $1 for shipping and they send them right to you. Check it out at https://hellobello.com/pages/freediapers. And if you are clicking on this offer it means that you likely have a new little bundle at home. Congratulations! Once you settle in and start to think of more than just how many diapers you will go through (and yes, it will feel like a million!) here are a few things you need to put on your “to-do list” as a new parent:
- Look at your life insurance. Fun stuff, I know. Who wants to talk about dying? The truth is that nobody wants to. It’s the least favorite part of financial planning that I do, especially because we are acknowledging that nobody is invincible, and we all have an expiration date. But now you have small people to consider and this will be one of the most important financial exercises that you go through. Talk to your advisor about the optimal amount of life insurance protection to have. Understand that it’s not just about having kids, but also about how much these little people cost. There will be expenses, and a lot of them! You should make sure that if you are no longer here there are adequate resources for the care of your children, the cost of sending them to school, and everything in between. Term life insurance is so inexpensive that it doesn’t make sense not to have it, and yes, you hope you never have to put a claim on it, but you’re loved ones will be glad you put in place if you meet an untimely demise.
- Have a Will done. Yes, I know, more death talk. But now that we established that we need to face this and plan for it, you need to have a Will prepared to outline your wishes for your family if you pass away prematurely. Not only do you need to consider who will take care of your children if they are still minors and you are no longer on the planet, but also who will oversee the money they will receive from the life insurance (and other assets) you purchased after completing the point above. Most people want our children to grow up and have the benefit of maturity as they enter adulthood. Establishing guidelines for the money children inherit is very important. I’m not sure about you, but I do not want my son buying a fun, expensive car when he’s 18 just because he can. It’s important to create a plan that allows your children to be cared for and grow into young adults without having the influence of having a great deal of money imparted on them. While you are at the task of getting your Will done, also get a power of attorney and health care proxy. It’s a good bundled deal.
- Give them a head start. Many clients ask me how to set up investments so they can start to save money for all the expenses that children incur. In many cases, parents want to plan for their children to go to private school versus public schools or save for college expenses. Some people want to make sure there are funds available for when our darlings start to drive and beg us for a vehicle. The most popular mechanism of saving for our kids is a 529 Education Savings Plan. This allows you to save money for your children for education expenses without having to worry about capital gains or income taxes. You could also set-up custodial account where you can save money for anything your children may need, and the taxation is different since these accounts are set-up under the minor’s social security number. In either scenario, it is best to have your financial advisor or tax professional explain the differences to you and how they impact your individual situation.
How many times do you have the opportunity to talk to people about their careers or jobs and find that they truly love what they do? I love it when I hear about heartwarming stories of joy and fulfillment that people have when they are in service to others, or how incredible it feels when someone invents a product that will help the community at large. I have said it a million times before – I truly love what I do for a living! I get to help people plan for and reach their goals and dreams, and nothing compares to it because my work does not feel like work. But I would argue that my career is not the greatest work I do. Being a parent is the best job I’ve had. And if my family loses me sooner rather than later, they will all be protected.
Iris Buczkowski is the founder of Birch Wealth Management (birchwealth.com). Original content provided by Iris is for educational purposes only and should not be construed as investment advice.