Top Financial Things You Should Do After Having a Baby

As some of you know, prior to my life as a glorious SAHM, I was miserable as a financial advisor. Now, despite me not enjoying the actual work of a financial advisor, it was incredibly practical and useful in terms of preparing for my own personal future. (Also, I met some awesome people who started off as clients and became my friends.)

One of the main reasons I took the job (other than desperation, fear, and general cluelessness) was because even though I knew I wouldn’t really like it, the knowledge gained about finances and money was invaluable.

And since we just had our fourth child, Sasquatch, I recently had to make a bunch of updates to our finances in order to ensure that in the event of our improbable demise, ALL my children (no matter how new), would be financially taken care of.

Incidentally, I wrote a similar piece in my Money Series three years ago after Glow Worm was born. (Also, my buddy at Just Making Cents riffed off this current post on his blog. Want to see how he scored?)

So, I thought since I just did a bunch of adulting and took care of this crap, here are some of my Top Financial Things You Should Do After Having a Baby.

Disclaimer: I am a former financial advisor and used to own a financial advising firm with my mother. I am not being compensated by any entity or company for the following information. I am ONLY explaining what I do for my own family. If you should so choose to take this advice, please realize that it is not customized nor tailored for your specific situation. I am not dispensing personalized advice for you or your family. I am not responsible in any way, shape, or form if your investments rise or fall due to market conditions. YMMV. You have been warned.

1) Update/Create a Living Trust or Will

I know. I’m a morbid sort. But believe me – your loved ones will appreciate the forethought and time you took to make sure your assets were titled correctly, as well as included all your progeny.

Wills detail where and who gets your stuff, but Living Trusts go a step further and bypass probate. Furthermore, they can detail who will assume guardianship of your children, who will be the trustee over your assets should you die before your children are legally able to manage their assets, as well as whole slew of other handy details that make your financial life easier.

Remember: probate can take at least 60-90 days and often times, much longer (not to mention, you have to pay probate taxes). Bypassing probate is super important when your children may need to access funds in order to cover their living expenses.

Make sure your will/trust include ALL your children. (Well, assuming that you want to include all your children. But since the majority of my readers have small/young children, chances are, you do.)

I may be a registered Democrat, but I started off as a Republican and certainly do not think the government can cure all and do all. As a result, I really do not want the government to decide who should take care of my kids, where my assets should go, or anything else related to my personal or financial life.

If you are like me in this regard, make sure you get a living trust or at the very least, have a will.

Also, make sure you actually title your assets in the name of your trust.

It makes zero sense to have a living trust but not have any of your assets in it. That just means you wasted your money on lawyer fees without any of the benefits of their lawyering.

2) Update your beneficiaries.

Whether they be IRAs, Roth IRAs, 401(k)s, life insurance, Transfer on Death accounts – WHATEVER. If it has a beneficiary, make sure your newest child is added to the beneficiaries.

The possibility that my children may think I purposely disinherited them from any of our accounts versus just being an idiot or procrastinator or just a forgetful human makes me so sad. No child should be cut out of their inheritance due to stupidity on the part of their parents.

It’s a pain in the ass, I know. Lots of forms to sign and social security numbers to look up. I get it.

Do it anyway.

As soon as possible. One never knows the future – and though morbid, better safe than sorry.

3) Open up a savings/brokerage account and/or a 529 college savings account for your child. 

Again, opening accounts is easy; funding them is harder. Fund the accounts, too.

Right after a child is born, I always deposit any gift cards or financial gifts in their account right away. (For gift cards, if someone gives my kid a $20 to Target, I will deposit $20 into their account and use the Target gift card however I want.)

I also transfer some “seed” money to get the account going as well as deposit any gifts they get throughout the year. I also set up their 529 plans with an automatic monthly investment. This way, I build in saving automatically and don’t have to remember to do it. (If I waited until I remembered, I would never save any money.)

I realize that not everyone has the luxury or benefit of people giving gifts or even having excess funds to save for their kids. Even so, I urge you to open up the accounts anyway. You never know when people are generous and kind during birthdays, graduations, and holidays. It is always better to be prepared. Plus, even if you can only sock away $10/month, that is still better than nothing.

4) Update your benefits.

If you have health insurance – ADD YOUR NEW BABY. Even if it is no longer your company’s open enrollment period, a new baby (whether through birth or adoption) is considered a life changing event and you usually have 30 days after birth/adoption to add your child to your health insurance.

If you don’t remember to add your child, then you will have to wait until your next open enrollment period before you can do so. Depending on when that is, you would have too pay for all the well-baby appointments and immunizations out of pocket and just pray your child doesn’t get sick or hurt the first year.

Save yourself the worry and the potential financial disaster. Enroll your child in your health benefits.

If you have other benefits at work that they qualify for, by all means, add them to those, too.

5) Get life insurance or make sure your life insurance is enough.

Look, I get it. I’m obsessed with untimely demises.

People always complain that life insurance is paying for something that won’t likely happen. But you know what? We pay for car insurance and hope to never use it. No one complains about that. (Well, that and it’s illegal to drive without car insurance. It’s thus far, not illegal to be alive without life insurance.)

Anyhow, my point is, if you are the primary breadwinner for your family and you die, how will your family provide for their living expenses? If you are one of the breadwinners, how will your family make up the difference in income? And if you are the SAHP, how will your family pay for the child care services you provide?

Even if you live modestly and have a lot of savings, how long will your savings last?

And right now, I really want to address the SAHP.

Look, I know you can always go out and get a job. I am obviously not commenting on our abilities to work and get well-paying jobs.

But to do so immediately after your spouse dies? While taking care of grieving kids and household stuff and paperwork and the business of the dead?

That is much harder.

And the last thing you want to think about after your spouse dies is how much of a hole you are burning through your savings while trying to find a job and sending out resumes and going on interviews while you and your children are grieving.

That sucks.

Furthermore, even if you, as the SAHP get a job, you will either have to accept a lower paying job in exchange for flexibility in your work schedule to take care of your children. Or, you have to pay for someone else to take care of your children. Either way, there is a monetary outlay that eats into your income.

Also, life insurance through your employer is great and all, but you need life insurance independent of your employer. 

Why? Because if your employment terminates, so does your life insurance. And then, when you re-apply for life insurance, you will only be older and more likely to be in worse health.

Oh, and if you get a large amount of life insurance, (eg: $1 million), get multiple policies. That way, if you have a financial difficulty or you no longer need quite as much life insurance because the kids are grown or your savings are much larger, you do not have to cancel the entire amount only to re-apply when you are older and likely to be in worse health and have higher premiums (after all, the older you are, the closer you are to dying).

So, if you wanted a total of $1 million coverage, get two $500,000 policies. That way, if your financial situation becomes more volatile or you no longer need that much life insurance, you just cancel one $500,000 policy and still have the other $500,000 policy.

All this talk of death when there is a new life in the family. Seems counterintuitive. But I firmly believe that once you bring a life into the world, you are responsible for providing for them. And children are never more vulnerable than after the death of a parent.

Thus, it behooves us to do all we can while we are alive to make sure that our children are protected and provided for when we are not.

Besides, the superstitious part of me feels as if you are just inviting trouble if you don’t get this stuff taken care of ASAP.

The practical part of me knows that life happens and that when you have a new baby, you’re totally sleep deprived and overwhelmed – but you also know that the baby is new and it’s a good reminder of doing this stuff before you completely forget or it’s too late.

Now, get cracking!

(And don’t forget to check out Just Making Cents comments and feedback and additional advice!)

How to Pay for College

Author’s Note: Today’s guest post is by my college buddy, JT, from the blog, Just Making Cents. Since I just had a baby, JT was kind enough to step in and write a post for my blog – and it is totally appropos since I have four kids to put through college. 

Anyhow, JT offered to add a post to my Money Series that I started when I had Glow Worm. I love his perspective because JT has 15+ years of Wall Street experience (he was a big shot at a famous hedge fund) and he and I used to talk finance back in the day when I was a Financial Advisor. (Of course, JT had to dumb down a lot of stuff for me since he is heads and tails more amazing than I ever could hope to be.)

I hope you enjoy his post and also head on over to his blog, Just Making Cents, where he blogs about finance, teaching your kids about finance, and parenting successful kids. 

Now that Halloween is over and you have eaten all the fun-sized Kit Kat bars and tossed the gluey candy corn, you will likely come across an underrated confection: the Blow Pop.

For first-timers, the Blow Pop’s hard candy exterior eventually recedes to a surprising, softish gum center, lasting twice as long as other candies.

Sadly, when it comes to a parent’s finances, not all surprises are as sweet, or enduring things as welcome. Just when you think you’ve paid all the costs to raise your child, up surfaces college tuition bills. Surprise.

A Hard Blow:

Those are some big numbers but hard to crack without some context. Because this is Mandarin Mama’s blog, let’s analyze the case of a Bay Area family with 2 children.

Assume this family owns a standard 3 bed, 2 bath home in San Jose, which costs $775,000*, and drives 2 cars. This family saves for Stanford** and Berkeley** (their children are exceptionally smart) and the parents want to retire at 67. They’re fairly frugal, only going out to eat occasionally and taking local vacations.

Stanford costs about $60,000 a year. Berkeley costs about $28,500 a year (Both figures include room and board). To catch up to tuition growth, you would need to save $11,000 a year for Stanford and $5,750 a year for Berkeley from the moment your child is born up to the last tuition payment.

Here’s what this family would need to make in income (for readers with 4 children – ahem! – it’s safe to assume you’ll need more income. A lot more.):

CostsAnnual
Housing$45,840
Food$12,000
Utilities$10,000
Transportation$9,600
Clothing/Supplies$1,000
Other/Misc$5,000
Saving for Stanford$11,000
Saving for Berkeley$5,750
Taxes$45,010
Total Costs + Taxes$145,200
401k$18,000
Total Income Need$163,200

Don’t make $163k a year? There’s hope for you.

4 Tips on Paying for College, Depending on Your Phase in Life:

1. Newly Unwrapped (You are pre-child or have children ages 0-5): Make that budget so that you can max out your 401k and put in $6-11k per child into a 529 plan if you have children. You are in the phase of life where you should live as frugally as possible, really watching your expenses. If you save well in this phase, it provides a great foundation for the next 3 phases.

2. The Fruity Shell (You have children ages 5-12): Start talking to your children about money now. Teach them what money is and how to make it. Have your child allocate a portion of his or her profit to college savings, a portion to spending (beyond the food, clothes, and shelter you provide), and a portion to charity.

When your child knows how to make his or her own money, this reduces the amount you need to spend on their clothes or gadgets, and increases the amount you can allocate to your retirement and their tuition.

The side benefit to this is that when they know it’s their own sweat going into paying for college, they’ll have a more purposeful outlook and make college and what-to-major-in decisions more pragmatically.

(I would not recommend pushing them to start a business. Rather, I would present it as a fun thing to do, then layer in the business and finance concepts.)

3. The Gum Shows Through (You have older children ages 12-16). Start (or continue) your child’s financial education. Discuss potential side-businesses they’d be interested in starting.

At this age group, they have two important resources and skills: 1) they are tech savvy, and 2) they have a developing social network. They can tap into both resources and start a blog with affiliate links or an eCommerce store. Like in the previous step, advise them to allocate a portion of the proceeds to their college savings. The side benefit to this is that starting and running a business looks good on their college application.

(Again, I wouldn’t push your child to start their business. At this age, I would emphasize the extra spending money and the benefit of it for college applications.)

If you are willing to switch jobs or go back to work, consider working for the college near you. Sometimes they have reduced tuition for themselves or partner colleges for employees. Research this first and see how long it takes to qualify for such benefits.

4. Chew Time (Your children are 17+): Don’t panic. Even if you haven’t saved anything, there are ways to minimize the bill and still save toward retirement. I’ll spend the most time in this phase since it’s the most urgent.

Community College

Your child may want to consider spending 2 years at a community college then transfer to a 4-year college. The advantage of this, besides cutting tuition almost in half, is that it helps the GPA. If your child has a 3.8 the first two years at Diablo Valley College and squeaks out a 2.8 at UC Santa Barbara, his or her overall GPA is a solid 3.3.

The best thing is for your child to know what they want to do, find the college that best enables that, then find the JC that’s a feeder school to that college. It doesn’t diminish career prospects to attend a JC first. When people ask about schools, it’s from where you graduated rather than where you started.

Lower Cost, But Not Quality

Remember that there are plenty of financial aid and scholarships available. The listed price of tuition is generally not the actual cost.

If a public university most fits your child, attending the in-state flagships like Berkeley, UCLA, Michigan, or UVA offer almost unmatched quality per cost.

However, if a private university best fits your child, focus on schools with large endowments and smaller enrollments — they sometimes offer reduced tuition based on your income.

Research schools with endowments north of $5 billion but undergraduate enrollment of fewer than 12,000 (a private school with an undergraduate enrollment north of 12,000 has less money to spend per student and less scholarship money. Essentially, you are paying private school tuition for public school experience).

The Logical Path

If neither flagship nor well-endowed/smaller private is an option for your child, make sure your child has a strong idea of what career path he or she wants to take. So if he or she wants to do electrical engineering, find the in-state public school that routinely sends its electrical engineers to large electrical engineering employers before your child applies to college.

Don’t wait until college starts to figure things out. There is a very specific script of majors and progression of internships that prequalify candidates for certain (often the most sought-after) employers.

Income, More or Less

You yourself may want to consider starting your own side or online business to generate extra money. If your business makes enough to cover your expenses and you feel confident enough to leave your day job, you will reduce your income, qualifying your child for scholarships and reduced tuition from certain schools.

If your business takes off, consider paying yourself a low salary to qualify your child for scholarships and reduced tuition. Carefully research this, however, since some schools consider your net worth as well and may require more history of low income.

The Decision 

Now, if it has to be a choice between saving for college or retirement, choose retirement. Your children will have a long career that will help them pay off their debt. You…do not.

That’s a Wrap:

Don’t let large, scary numbers frighten you from acting. No matter what phase of life you’re in, the future can be as sweet as a lollipop if you’re willing to research and put in the extra effort. Yes, you can have your candy and eat it too.

Like what you read and want to find out more about money and parenting? Get a free, 3-day course on teaching your child about money and I’ll send you a free guide to helping your child start their own business. Just sign up here with the phrase “Mandarin Lemonade.”

*Based on median home listing in San Jose, CA on Realtor.com

**Cost of College: Using data from the CollegeBoard of price increase above inflation plus inflation, both for the last decade, Stanford and Berkeley cost assumed to rise 4.25% and 4.75%, respectively.

Savings Growth: Assumes historical growth rate of the S&P 500 of 7%.

Final Money Tally for Taiwan Trip 2016

Ok. I am super reluctant to write this post because it reveals something about me that though I joke about with my closest friends, I don’t mention too often because I personally think it makes me look bad. After all, no one likes a braggart or someone who is seemingly thoughtless with money.

And honestly, I can be pretty thoughtless with money.

Not in the sense that I don’t think about money – but in the sense that I know our general threshold and that as long as an expenditure is below that threshold, I don’t even blink.

We are very comfortable and live a very privileged life. I know it.

You see, I have a thing that Hapa Papa likes to call Rich Girl Syndrome (RGS) in the sense that I think all things can be solved if you throw enough money at it. (Irish Twins’s husband, MBE calls it the Wallet Save.)

As a result, I don’t really think about budgets or how much something costs unless it is exorbitant or something I personally find outrageous. Also, my mother gave me a very generous sum of money for the summer so that I wouldn’t have to worry about taking taxis and books and food. She wanted to make sure I wouldn’t be stingy – and that I would make sure not to get over-tired and take things easy.

So.

Obviously, my budget will likely not be yours in the sense that I thought very little about the costs except in terms of how it cut into the amount I was willing to spend. But in general, I did not count pennies or dollars or NT. I just did what I wanted when I wanted.

I suppose it helps that I’m not exactly a luxury shopper and all I really spent my money on was food and books. But still, the money went fast and Hapa Papa is mad I didn’t save more money from the trip. (Although I did save a bunch of money two years ago from the generous sum my mother gave me then. But I suppose that doesn’t count for this year.)

So.

Now you know.

My budget likely will not be your budget.

However, at least you will know a bit more about pricing.

I realize that I am a very privileged person in terms of finances and that me blithely saying, “Just go to Taiwan for six weeks! Easy! Just say goodbye to $12-13,000!” is somewhat implausible for many of you.

Also, keep in mind that we choose not to spend money on many other things during the year that likely other people choose to spend their money on (eg: trips, sports, etc.) because I know we’re going to be spending a lot of money on a trip to Taiwan.

So. Please consider my breakdown not in terms of what you HAVE to do, but more in terms of what I spent as best as I can remember it. (Which, honestly, has huge gaping holes in it because um, RGS.)

Obviously, YMMV in terms of costs depending on how often you eat out, how often you take taxis vs buses vs MRTs, how much you shop, where you buy groceries, what extracurricular things you do, what programs you choose for your children, and where you choose to live (and if you choose to rent or live with family).

Author’s Note: Any comments insulting me or the people who spend similar amounts on this type of trip will be deleted. 

I’m sure if any of us were to examine how you spend your money, we could come up with plenty of ways you are a wasteful asshole.

So since you do not know anything about our family income, monthly expenses, or financial situation other than what I choose to share on this blog for the purposes of you having an idea of how much a trip such as this can cost, any judgmental bullshit about how I am such a horrible snob or how it sucks to be poor (which, we can all readily agree that given the choice between having more money or less money, most of us would prefer the more financially secure position), or how it must be nice to be rich can just go suck on an exhaust pipe. 

So, without further ado, here are the costs for my Taiwan Trip 2016. All costs are in USD unless otherwise noted.

Travel: $4,400

– Round trip airfare for 1 adult and 3 children: (We used airline points for Hapa Papa’s tickets) $4400

Accommodations: $3,975

– Airbnb newly renovated 1br 1 bt apartment in a trendy/popular/convenient neighborhood for 40 nights: $3800 (includes about $200 in Airbnb fees)

– Hotel in Kaohsiung 1 night including breakfast: (bought as part of a business package deal including 1 night hotel and breakfast and with a Taiwanese discount so prices are approximate) $175

Education: $2,609

– International School Tuition, 4 weeks: $1,121/child (Total: $2,240)

– Local Camp A, 2 weeks: $306

– Local Camp B, 2 weeks: $339

Transportation: $990

– Taxi from TPE to apt: $40/$1300NT (7 passenger car with 2 rented car seats at $9 per car seat)

– Taxi from apt to TPE: $30/$1000NT (7 passenger car, 0 car seats, private car)

– Taxis in general: $600 (estimate)

– MRT for 1 adult, 1 child, and 1 adult for 2 weeks: $150 (estimate)

– Bus: N/A

– High Speed Rail ticket for 1 adult, 2 kids reserved seating: (bought as part of a business package deal including 1 night hotel and breakfast and with a Taiwanese discount so prices are approximate) $150

Airport Parking: $20 (Keep in mind, we saved a bunch here because we asked friends to drop off our minivan at the long term parking lot the night before we arrived home. Otherwise, if we parked in long term parking for the entire time Hapa Papa was in Taiwan like we did in 2014, the cost for airport parking would be closer to $250-300.)

Food: $1,594

– Groceries/Toiletries/Misc: $382 (estimate)

Eating Out: $1212 (estimate)

Incidentally, I likely would have spent far less if I didn’t have to provide my boys with food for lunch. I only did so because I worry about their food allergies. Otherwise, I would not have to worry about those “extra” meals as they were included in our school tuition.

However, I suppose since I got treated out a lot by family and family friends (and at way more expensive places than I would have personally chosen), it more than evens out in my favor. So, um, nevermind.

Miscellaneous: $1,525

– Kid Playspaces and Activities: $274 (Incidentally, I was an idiot and forgot a pair of tickets I had already bought so I ended up having to buy an extra two tickets. So, I guess I have two tickets for next year. Sob.)

– Kid Crafts: $90

– Cel Phone: $60

– Books/DVDs/CDs: $720

– Family Gifts/Reimbursements: $400

– Misc: $50

TOTAL: $15,093

Good Lord. Now I really feel like an asshole.

However.

One of my other friends is ALSO in Taiwan and in the same city and they were NOT as thoughtless as I am and STILL, they spent a similar amount. Why? Because some fixed costs you just can’t get rid of like round trip tickets and lodging.

Here are some of her basic numbers:

– Travel: (roundtrip tickets for 2 adults and 2 children) $5,400

– Housing: (4 br, 2 bt, washer/dryer in a less popular neighborhood for 7 weeks) $4,900

– Local camps, 5 weeks: $800

– Adult Language camp, 7 weeks: $500

– Books/DVDs/CDs: $625

– Food/MRT/HSR/Misc: (didn’t really take taxis due to safety concerns) $1642

Total: $13,867

Keep in mind, her housing costs are so high because she had other family members crashing at her place during various points. But she really didn’t eat out at fancy places (mostly the food stands and corner restaurants) and they definitely paid attention to their bottom line.

So, if you are a typical family of four and have no means to get free plane tickets and do not have access to free housing in Taiwan, the bulk of your costs are fixed at approximately $8-9,000. That’s BEFORE you do ANYTHING else.

So, are you just screwed with the costs?

Not necessarily.

While the fixed costs likely will not move much, you can do some small things that might change the hugeness of the number to slightly less huge. (I do concede housing is a place you can fiddle with – but it really depends on what amount of discomfort you are willing to endure for 4-6 weeks.)

So, here is a way to redeem myself.

Therefore, another list: Where you can save money on your trip to Taiwan.

1) Keep all your receipts and get a tax refund.

If you bring your foreign passport to the malls or save all your receipts, you can receive a tax refund on your purchases at the mall or at the airport. But that would require you to keep ALL your receipts.

2) Eat street food and shop at local groceries.

If you didn’t eat out at the more expensive restaurants and ate mostly food court food or street food, you will save a lot of money. I ate a LOT of shaved ice. Some were cheap. Some were not.

I also ate at places that were close to $40USD/1500NT for lunch or dinner. That’s a lot of money in a place where you can get a decent and filling meal for $6USD/200NT or less.

3) Enroll in local schools and camps.

The reason camps were so expensive for Gamera and Glow Worm were because they were in an international school. I got many comments from locals that the school they attended is one of the most expensive schools in the city.

I would have preferred to send them to a local school, but they wouldn’t take Glow Worm due to his food allergies. According to family friends of friends, a month of a local 幼兒 (you4 er2/preschool 3-6yo) or 大班 (da4 ban/kindergarten 6yo+) for $300USD a month.

4) Live in less popular neighborhoods.

I chose to live in a very expensive neighborhood because I wanted to be close to the MRT, to a lot of convenient restaurants I like to frequent, have a renovated space, and I like clean streets that don’t smell. I also don’t like being too far away from my children’s schools and activities.

You do NOT have to choose this for yourself. There are plenty of decent places to live that are larger and cheaper than what I got for my money. If you do not mind living further out on less popular MRT lines, or doing more research in terms of local schools vs. the big popular names, or even choosing less popular cities, you will save a lot of money.

I don’t think your experience will suffer for it.

5) Take the bus or MRT instead of cabs.

Trust me. There were many times I would have preferred to take the MRT or bus – but as things shook out (and with the number of children and them being uncooperative or the weather being sopping wet), I took cabs more often than I technically needed to.

In general, though, I took the MRT as much as possible. I didn’t go for buses at all this time, but I loved buses my last trip to Taiwan. I think it depends on your location and your destinations and what ends up being most convenient.

That said, my average taxi ride was about $5-6/150-200NT. However, an MRT ride is $0.50/16NT regardless of distance and the bus is approximately $0.31/10NT. (Keep in mind that kids are free unless they are 6 or above a certain height. Their fares are even lower.)

I’m certain there are plenty more ways to save money. (Such as not buy so many books or CDs or DVDs – but since you would spend more to have the items shipped since shipping to the US is approximately $75-100/22kg box and takes at least 2-3 months, personally, I think it costs more money not to.) But being as I am likely the last person on Earth to be useful in this arena, I am all tapped out for suggestions.

If you have any to share, please do so in the comments! (But keep in mind: not every one has access to mileage points or relatives in Taiwan. That, in itself, is a privilege of sorts.)

Alright, I’m done for today. Have a great day!