Money Management

You can take several steps to give your children financial stability. Discover the fastest ways for stay-at-home parents to secure their children’s financial futures. [[{“value”:”

In the journey of parenthood, securing your child’s financial future is akin to planting a tree. The best time to start was yesterday; the next best time is today. Stay-at-home parents, in particular, are uniquely positioned to nurture this growth from the ground up.

It may seem daunting with the dual challenge of managing a household and contributing to the family’s personal finances. Yet, there are strategic, efficient paths to ensure your children are set on a course of financial stability and success. Let’s explore the three fastest ways to turn these aspirations into reality.

1. Teach financial literacy early on

One of the most powerful gifts you can give your children is financial literacy. Teaching them about money management, budgeting, and investing from a young age sets them up for a lifetime of financial success.

Introduce concepts like saving, spending wisely, and investing early. Use real-life examples and involve them in family financial discussions when appropriate. Tools like allowance systems, savings jars, and educational apps can make learning about money fun and engaging for kids. By teaching good financial habits early, you empower your children to make smart financial decisions in the future.

2. Get a life insurance policy

Life insurance is a key part of financial planning, especially for stay-at-home parents. While it’s easy to overlook the financial contributions of a stay-at-home parent, their role in providing child care and managing household responsibilities is invaluable. In the event of an untimely death, a life insurance policy ensures your children’s financial needs are taken care of. Consider a term life insurance policy with coverage that matches your family’s needs. This way, you can have peace of mind knowing that your children will be financially protected, regardless of the future.

3. Ask family to contribute to a 529 or UTMA account

When saving for your child’s future education expenses, you don’t have to do it alone. Engaging family members in the financial journey can be immensely beneficial. Consider asking grandparents, aunts, uncles, and other relatives to contribute to a 529 college savings plan or a Uniform Transfers to Minors Act (UTMA) account. These accounts offer tax advantages and can significantly impact your child’s financial future. Let’s explore their potential impact:

UTMA account:

A UTMA account allows you to gift financial assets to your child without needing a guardian or trustee. It offers tax advantages, with the first portion of unearned income being tax free and the rest taxed at the child’s lower rate.

For example, if your family contributes a total of $1,000 annually into a UTMA account with an assumed 7% growth rate, by the time your child is 18, this investment could grow to about $34,000. If allowed to mature, it could even surpass $800,000 by retirement, depending on market conditions. This makes it an excellent way to diversify your child’s investment portfolio from an early age.

529 college savings plan:

A 529 college savings plan is another essential tool for saving for your child’s education. This account allows you to save tax free for qualified education expenses, such as tuition, room and board, and books. With high contribution limits, often over $300,000 per beneficiary, a 529 plan offers substantial savings potential.

Plus, many states offer tax incentives for contributing to a 529 plan, further enhancing its appeal for savers. Starting early with a 529 plan allows your contributions to compound over time, significantly reducing the burden of higher education expenses.

Securing your children’s financial future requires careful planning and strategic investments. By teaching financial literacy, getting a life insurance policy, and leveraging tools like UTMA accounts and 529 college savings plans, stay-at-home parents can ensure their children have the resources they need to succeed. Start early, stay informed, and prioritize your children’s financial well-being for a brighter future.

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A 15-year mortgage is a lot cheaper than a 30-year one — if you can afford the higher monthly payments. Read on to learn more. [[{“value”:”

Houses are expensive these days, and so are mortgages. Clearly, that’s not the best combination. And so you may be eager to do what you can to make homeownership more affordable in the long run.

One option you may be considering is signing a 15-year mortgage instead of a 30-year loan. As of the writing, Freddie Mac puts the average mortgage rate on a 30-year loan at 6.82%. On a 15-year loan, it’s 6.06%. That’s a pretty big gap, and it could result in savings in the course of paying off your home.

But is a 15-year loan a smart bet for you for a $300,000 mortgage? You might save a lot of money on mortgage interest, but whether you end up happy with that choice is questionable.

An idea that might backfire on you

If you sign a 30-year, $300,000 mortgage today at 6.82%, your monthly principal and interest payments will be $1,959. If you sign a 15-year, $300,000 mortgage today at 6.06%, your monthly principal and interest payments will be $2,541.

All told, you’re paying an extra $582 a month, or $6,984 a year, for a 15-year loan. But the interest savings you might reap could be enough to drive you in this direction.

With a 15-year loan, the total interest charged on your mortgage is $157,435. With a 30-year loan, it’s $405,234. That’s a total difference of about $248,000. So if you can fit the higher monthly payments into your budget, you may decide a shorter mortgage is worth getting.

There is, however, a potential flaw in that plan. First, if you allocate an extra $582 a month to your mortgage payments, you might leave yourself without enough money to cover your remaining expenses. And even if you can cover your essential remaining bills, will spending that extra $582 a month on housing make it so you’re never able to go see a concert, grab takeout, or spend on other things that make your life easier or more convenient?

Also, what if you work hard all year long and deserve a break? Will spending almost $7,000 extra per year on your mortgage make it so you’re not able to take vacations? That doesn’t seem fair to you.

It’s also worth noting that you could earn a lot more by investing the money you’d put toward a higher mortgage payment. The stock market’s average annual return over the past 50 years has been 10%. So if you invest $582 a month over 30 years, you might end up with over $1.1 million if you snag that same 10% return in your portfolio. That puts you ahead financially compared to saving $248,000 on mortgage interest.

This illustration is worth considering. But it also sort of misses the point in that committing to higher mortgage payments (or committing to parting with that extra money every month by investing it) could make your life more difficult year to year while you’re paying off your home. So while a 15-year mortgage can save you money, it may not be a route you want to take.

Think twice before committing to a 15-year loan

Even if you’ve run the numbers and are sure you can afford a 15-year mortgage and the higher monthly payments that come with it, you may end up regretting that decision if your financial situation changes. So you may want to consider signing a 30-year mortgage, but making extra payments on your home as money allows you to.

That way, you’re not committed to making those higher payments. If there’s a year you want to take a big vacation, you’ll have that option without defaulting on your loan obligation. But that way, you can potentially save yourself some money on mortgage interest without being locked into higher payments that could end up being a burden.

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Doubling up on an Amazon Prime and Costco membership might work to your benefit. Read on to see why. [[{“value”:”

For many people, Amazon Prime’s $139 annual fee is more than worth paying. In exchange, you not only get unlimited free two-day shipping, but you also get access to other helpful programs like Try Before You Buy, where you can try on clothing and see if it fits before having your credit card charged. And if you’re someone who loves a quiet evening at home, the free content from Prime is apt to make for some nice entertainment.

If you’re already fitting the cost of a Prime membership into your budget, then you may not be in such a rush to sign up for a Costco membership. Although you’ll only pay $60 for a basic annual Costco membership (an Executive membership costs $120 a year), you may feel that you’re not going to get the best value out of a Costco membership if you already have Prime. But here’s why joining Costco could make a lot of sense.

Amazon Prime has its limits

Amazon offers a world of products, from electronics to apparel to toys. But one area where you may not benefit so much as a Prime member is fresh groceries.

Granted, with Amazon, you get access to Amazon Fresh, which gives you access to a wide range of fresh grocery products and even delivery. But Amazon Fresh isn’t known for its bulk discounts on groceries the way Costco is. And that’s where you might reap a world of savings.

Let’s say you have a larger family and normally spend $600 a month on groceries at a regular supermarket. With Amazon Fresh, you may not save any money. At Costco, you might manage to whittle your monthly grocery bill down to $540 by purchasing so many of the items you use frequently in bulk. That $60 savings could be enough to make you whole on your $60 membership fee — and come out ahead financially the rest of the year.

Costco offers a world of perks

While access to fresh food in bulk is a good reason to join Costco even if you’re a Prime member, another thing you should know is that Costco offers a world of benefits outside of just food and household products. For one thing, Costco’s travel service gives members access to hundreds of competitively priced vacation packages. On Amazon, you might be able to find a great deal on luggage — but you can’t book your upcoming trip through Amazon.

Also, Costco stores commonly have an auto center where you can purchase tires and have them installed at no additional cost. You can also get free rotations and flat tire repairs. That’s not a service Amazon provides.

And don’t forget Costco’s affordable gas. Filling up your tank may be a lot less painful if you do it at Costco.

Of course, your Prime membership might make it so you’re doing less shopping in person and therefore aren’t filling up your car as much. But still, it’s nice to save money for those times when your vehicle does need some fuel.

For these reasons, it could easily pay to join Costco and continue paying for Amazon Prime at the same time. And remember, with Costco, you can cancel your membership for a refund at any time. So what you may want to do is sign up and see how things go.

In a worst-case scenario, if you find that your Costco membership isn’t doing much for you, you can always cancel and just pay for Prime. But you may find that both memberships complement each other nicely, allowing you to save time and money.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Costco Wholesale. The Motley Fool has a disclosure policy.

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Frequent flyers with elite status can get lots of complimentary benefits. Here’s why it’s not always worth the hassle, even if you fly often. [[{“value”:”

I love to travel, so I fly fairly often — eight times last year, to be exact. But I don’t have elite status in any frequent flyer programs, and to be honest, it doesn’t interest me.

Getting elite status is a popular goal for many travelers, mainly because of the benefits offered. If you have it, you’ll earn more miles on flights you book. Depending on your status tier, you could also get early boarding, waivers on common fees, airport lounge access, and complimentary upgrades.

Why wouldn’t I want all that? There are a few reasons I don’t care about earning elite status. If you’ve been thinking about going for it, you may want to see if any of these apply to you first.

I’m not loyal to any particular airline

I’m not the type of person who always flies with the same airline. I book based on which airline has the most convenient flight options and the amenities I want (for example, if it’s an international flight, I make sure there’s a business-class cabin with lie-flat seats).

You earn elite status based on the money you spend and the number of flights you take with an airline. For that reason, it’s much harder to do if you fly with multiple airlines.

Before you try to earn elite status, make sure you’ll be able to take most or all of your flights with that airline. If you live near one of its hubs, then it could be worth it. But if you like to have flexibility about which airline you use, then there’s no point to chasing elite status with a single carrier.

I book business class, so I already get most of the perks

Because I love to travel, I want to enjoy it as much as possible. So I always book business class, or first class if it’s a domestic flight. I want to be comfortable, and also, I love the pre-flight champagne.

It’s more expensive, although I save a lot of money by paying with points from travel credit cards. In fact, earlier this year, I saved $5,687 this way on business-class airfare. But overall, flying business class costs me more — and I’m fine with that. Travel is one of the places where I don’t mind spending money.

Booking a business-class ticket gets me many of the same benefits of elite frequent flyer status. I can already check a bag for free. I can visit the airline’s lounges. And I don’t need to get upgraded. Having status with an airline wouldn’t improve my travel experience much, if at all.

Frequent flyer programs are too complicated for my tastes

Whenever I read about frequent flyer programs, my eyes glaze over. To get elite status, you need however many MQDs, PQFs, or PQPs, and those are just some of the many acronyms I’ve seen airlines use.

It seems like way too much work. I don’t want to keep track of the loyalty miles or points I’ve earned, calculate how much I’ll earn through future flights, and make sure I’m going to meet the yearly requirements to get elite status.

Some people enjoy learning about frequent flyer programs and strategizing how they’ll move up the status tiers. If it’s interesting to you, then go for it! But if it feels like a chore, it may not be worth it.

Trying to achieve elite airline status makes sense for some travelers, specifically those who travel with the same airline often. But most travelers are probably better off booking with whichever airline has the best deal and flight option available. If you want to upgrade your travel experience, you can do that on your own by booking a premium economy, business, or first class ticket. And if you’re trying to keep costs down, make sure to pick up a credit card that earns travel rewards.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Money-saving hacks are important for most households, especially homes with a stay-at-home parent. Learn three helpful ways to save. [[{“value”:”

Approximately 26% of mothers and 7% of fathers are a stay-at-home-parent (SAHP), according to the Pew Research Center. One of the biggest adjustments that comes with this change is learning how to pay bills on one salary rather than two. Here are some of the easiest, fastest ways to save money (and potentially, your household budget) as a stay-at-home parent.

Hack No. 1: Come up with a hard number

If the SAHP has quit a job to be home with the children, figure out how much lower your household income actually is. To begin, add together the following amounts:

How much you’re saving by not paying for child careHow much less you’re spending on transportation costs (including public transportation or gasoline and car maintenance)How much less you’re now spending on attire than you were when the SAHP worked outside the homeHow much less you’re spending on meals away from homeHow much you’re saving by not paying for coffee away from home, midday snacks at the office, lunch out with co-workers, happy hours, and other small expenses that often accompany working outside the home

Once you’ve come up with a total, subtract that amount from the SAHP’s previous take-home pay. Let’s say the SAHP’s previous net income was $5,000 a month, but by staying home, you’re saving $3,500 monthly. That means you’re dealing with a $1,500 difference.

If thanks to the working parent’s income, you won’t miss the $1,500, that’s great! However, if you need part (or all) of it to make ends meet, you know exactly how much your savings goal should be.

Hack No. 2: Jettison tax refunds

If you’re still receiving a tax refund each year, it probably feels pretty nice. But unless you have plenty of cash hitting your checking account each month, you could put those refund dollars to work year-round.

The average annual tax refund so far this year, as of IRS data from April 5, is $3,011. If that’s about what you receive, that means you’re giving the federal government an interest-free loan of $3,011. Rather than allow the government to use that money, why not keep it in your pocket?

When it comes to tax time, the ideal situation involves owing no money and receiving a very small refund (if you receive one at all). Let’s say you have an extra $3,000 deposited into your bank account throughout the year rather than going into government coffers. That would automatically give you an additional $250 monthly to spend as needed.

If you would rather see the money in your paychecks than a once-a-year refund, talk to your employer about changing your annual withholdings.

Hack No. 3: Grab low-hanging, money-saving fruit

For SAHP households, the lowest-hanging pieces of fruit are mobile apps. Here are six great examples:

Price comparison apps: As the name suggests, price comparison apps help you compare prices on the items you need to buy. They work in one of two ways: You either type in the product name to learn which stores sell it and how much it costs, or you scan an item’s UPC code while you’re in the store to learn whether you’re getting the best price.Coupon apps: Each coupon app works slightly differently. Some provide digital coupons or coupon codes. Others give you a cash back reward for the products you buy daily. Still others provide points that can be redeemed.Cash back apps: Cash back apps work by paying you a small amount of cash back for every eligible purchase you make.Gas savings apps: These allow you to see which gas stations around you have the best prices on fuel. It’s a great way to prevent driving around for the lowest price.Grocery-specific apps: An app that tells you where the best prices are on grocery items is hard to beat. Given that food swallows up such a large portion of a household’s monthly income, it’s a great way to end up with more money to invest at the end of the month.Budgeting apps: The grand dame of all apps is a strong budgeting app. After all, living without a realistic budget is like trying to drive cross country with a map.

If the amount of money you save isn’t quite enough to close the gap, or you’re simply looking for a little extra to put away for a rainy day, you may want to consider a part-time gig from home that you’ll enjoy. Here are a few ideas:

Provide before and after-school child care for othersBecome a tutor (online or in your home)Sell handmade items onlineManage social media accounts for busy small businesses

Personal finances are important, but if having a parent at home is important to your family, it’s worth pursuing. The rewards may not be financial, but there’s nothing like the emotional reward of doing what’s right for you and the people you love.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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