Dumb money mistakes new parents make way too often


Written by:


First and foremost, congratulations on your first child! Being a new parent is such an honor!


Now, as a new parent, you’ll now have the important responsibility of caring for another human being. Like any gift you receive, a child is something to not only care for but also cherish forever.


SPONSORED: Find a Qualified Financial Advisor

1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.

2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.






Though, you might have questions or concerns on how to be financially stable when raising a child. You’re not alone. Many new parents have this same concern as you do. According to Cision PR Newswire, as of 2017, the average cost of raising one child until the age of 17 is $233,000, nearly $14,000 per year. More concerning, The Bump suggests that the 3 financial concerns that new parents have are the following:

  • How will they afford their child?
  • How will they be able to pay for their child’s college? AND,
  • What if something happens to the parents themselves?

To make matters worse, finances might or might not get a time of day, since most new parents will focus more on functioning on little sleep and tending to their child’s never-ending needs. While that’s all understandable, it’s still important to have a plan for your finances, even if you’re a new parent.


The good news is, we’re here to help you with your finances, as you continue to tackle being a new parent! In this essential guide, we’ll show you 15 of the most common mistakes that many new parents make when it comes to their finances, and how you can avoid them.


Let’s dive right in!

1. Not Having A Budget

First, having a budget is a must. Even if you’re well off financially, you should still think about finances.


Now, keep in mind that having children isn’t the same as living on your own. “That means that whatever activities, for example, that you’d use to do pre-baby would no longer be available to you after you have your baby. Suppose you would go to the bar and spend money on drinks. Or, you might have had the habit of saving money pre-baby. Now, with a new addition to the family, you find yourself spending money on your bundle of joy. That’s totally normal.


No matter the case, you’ll need to have a plan, when it comes to budgeting. Budgeting helps you see what you need, and what you don’t need. Rather than spending blindly, budgeting helps you be smarter with your money. Think about the types of groceries that you’ll need for both you and baby, along with the bills, doctor visits, transportation needs, and so on, that you and your baby will need. In this way, you and baby can be ready for any other expenses that might spring up on you.


Speaking of any other expenses that might spring up out of nowhere, this leads to the second point …

2. Not Having A Safety Net

Yes, having a safety net is essential.


Sometimes, life might throw some curve balls at you without warning. This is especially common for new parents, since they’re still new to the game.


Here’s one example: Suppose that you have a car to run errands with your child in tow. What would happen if your car broke down, or you get a flat tire? Would you have the money to fix your car? Would you have a spare tire on standby?


Here’s another example: No new parent wants to see their child get sick or hurt. But what if your child gets sick or injured? Would you be able to afford their medical bills? Their doctor visits? Their prescribed medications?


That’s why it’s important to set up an emergency fund. Essentially, you set aside money every time you get paid (if you have a job); or, if you receive money as gifts, you can set that aside for emergencies. In this way, you’ll create a safety net for whenever things like medical or repair crises arise.

3. Spending Too Much On Baby Things

Who wouldn’t want to spoil their first child? In fact, as a first-time parent, you would want to treat your child to many things like toys, clothes, and other nice things. After all, you only want the best for your bundle of joy.

However, while it’s great to treat your child with toys and goodies, it’s still important to be wise about your spending habits. Essentially, you have to think about the things that your baby will need, including:

  • Food
  • Clothes, shoes, and diapers
  • Toys that are effective in entertaining your child
  • Doctor visits and medicine, etc.

Plus, you can have hand-me-downs for things like clothes, toys, etc. (If you have a big family, this can be a definitely great thing for you!) You can also look to yard sales and thrift stores to save money on things like baby clothes.

4. Spending Too Little On Baby Things

Now, just because you’d want to save money, doesn’t that you should deprive your child from having things like toys, food, and other necessities. It’s important to make sure that your child is well-fed, well-entertain, and well-off. That’s why you should set a good budget for how much to spend on your child, and how much to save. Just as long as you’re not cheating your child out of certain things, you should be okay on the financial part of things.

Remember the essentials (as mentioned in the previous point):

  • Food
  • Clothes, shoes, and diapers
  • Toys that are effective in entertaining your child
  • Doctor visits and medicine

… and so on.


Needless to say, don’t deprive your child, but still be wise about your money.

5. Not Saving For Retirement

One of these days, you’ll find yourself needing to retire from your job. While retirement can be a new phase in your life, you’ll need to be ready before that day comes. That means, now is the time to start saving for retirement, if you haven’t done so already. (Yes, right now!)


But how can you save for retirement? Well, there are a few options:


While saving for your child’s college fund is just as important (which we will cover later on in this guide), you would still need to think about squirreling away money for retirement. If you need to borrow money from your child’s tuition, you can. Plus, if your place of employment offers 401(k), then don’t hesitate to sign up for it. Whatever you can do now to save for retirement, do it now! Otherwise, you won’t have a nest egg to be cushioned with in your golden years.


Read more: Can You Retire at 62 With 300k

6. Not Looking At Eligible Tax Savings

Believe it or not, there should be tax breaks and savings, if you’re a parent. In fact, there are tax breaks for almost any situation, if you do your homework really well.


With that said, consider the following tax exemptions:

  • The popular personal exemption of $3,950 per child
  • The child tax credit of up to $3,000 for each child, depending on how much you make
  • The child and dependent-care credit, which covers up to 35% of the cost of things daycare, pre-K, day camp, etc.
  • The adoption tax credit (up to $14,300 to cover things like fees, court costs, and travel expenses, etc.), AND
  • Tuition for special-needs students (provided that the tuition and other unreimbursed medical expenses exceeds 10% of your adjusted gross income)

So, you see, it pays to do your homework and find tax breaks that you’re eligible for. The Internal Revenue Service (IRS) has a page where you can check out your family’s eligibility for any tax breaks, credits, or deductions.


7. Not Looking Into Life Insurance

Life insurance, whether you have children or not, is important for anyone and everyone. Having life insurance is essential, because if you, your spouse, or both you die for some reason or another, then it’s important for your dependents – your beneficiaries – to be provided for when you’re gone.


One option is to get some life insurance coverage through your employer. However, you can never rely too heavily on it, because that’s not enough to cover everything if something were to happen to you. Plus, if you get laid off, or you get fired, you’ll lose your employer-provided insurance.


So, what’s the recommended amount that you need as part of your life insurance plan?


It’s important to have at least a $500,000 policy – and that’s bare-bones minimum. In addition, you’ll need to invest in a group policy rather than an individual one, because the former option is much cheaper than the latter.


As for when your children grow up, you’ll need to think about keeping them insured until they are through their schooling and no longer need your financial support. Once your children grow up, have paying jobs, and are living independently, then you’ll no longer need them to have them insured on your plan. You can always recommend to them your insurance company, if you’ve had good experiences with said company.


Plus, consider the idea that when your dependents are through college and don’t need financial support, you can opt to convert the insurance policy to a permanent whole life or variable life one. By doing so, you can decide later if whether or not you want lifelong coverage.


Read more: Million Dollar Life Insurance – Do You Need It?

8. Not Looking At Disability Insurance

It can be devastating for your child to either grow up to have a disability, or be born with one. However, that doesn’t mean that you can’t find disability insurance for them. Even if you’re financially well off, you should still think about getting disability insurance. Like anything else in life, debilitating injuries can lead to disability, which can cost you thousands of dollars if not covered by insurance.

There are a few ways to get disability insurance:


a. If your place of employment offers insurance, then sign up for it. Once you satisfy the conditions for it, you’ll be covered by their insurance.

b. Look at different insurances and plans and see which one is the right for for you and your child, along with how much it will cost.


Now, if you’ve been out of work for a while, be sure to research policies that can help you while you look for another job.

9. Signing Your Child Up For A Savings Account

Like anyone else, your child will eventually learn to save money. However, when opening a savings account for your child, don’t do it prematurely. While it might be tempting to open a custodial savings account after a relative sends your child a check or money, it’s a big no-no. Why? Because if you need money right away, you can’t access it. Plus, having a savings account for your child can make you ineligible for financial aid.


So, how can you ensure that your child has a good nest egg?


Opt for a 529 plan instead. By putting your child’s money in a 529 college-savings plan, the money grows tax-free as long as you use it toward college expenses eligible under that plan. Be sure to read up on your bank/institution’s rules and policies as you set up a 529 plan for your child.

10. Ignoring A Healthcare FSA

According to Healthcare.gov, a flexible spending account (FSA) is where you put money into it, and then use it to pay for certain out-of-pocket healthcare costs, while not having to pay taxes on it.

Ignoring this beneficial account can cost you in the long-run. Without an FSA, you’ll risk paying for doctor visits, bills, etc. out of pocket, which can take a toll on your wallet. So, why not save big by signing up for it?

All you have to do is take into account the following:

  • Your doctor expenses
  • Dental costs
  • Your prescription costs
  • Vision, etc.

Next, allocate that amount (which is usually up to the annual FSA maximum of $2,750 per year) at open enrollment, when applying for an FSA. By allocating said amount, that can save you between 20 and 50% on eligible health and medical services.

However, if you’re in a high-deductible medical plan, then go for a Health Savings Account (HSA). An HAS lets you contribute up to $7,200 (family) or $3,600 (individual) tax-free. Afterwards, you can invest in the surplus funds, if you don’t need them immediately.

11. Not Having The “Money Talk” With Your Child

One of these days, you’ll need to talk to your child about money. Otherwise, how else would your child:

  • Learn to save money?
  • Learn to spend their money wisely?
  • Learn to use and balance a checkbook?
  • Learn to save for college?
  • Learn to set up budgets, etc.?

As you can see, financial literacy is important to have. And, believe it or not, kids are never too young to learn the basics of financial literacy at a young age.


For example, kids love to role-playing and use their imaginations. If they love to play store, they’re already understanding the basics of financial literacy.


And, once your child grows older, you can introduce them to allowances in exchange for completion of chores, homework, or other responsibilities.


Read more: Here’s How to Teach your Kids to Invest 

12. No College Fund

College is a great thing, especially for your children. Now, while college can be an exciting experience for your child, you might be worried about how you’ll be able to afford it. If you haven’t already been saving money for their college fund, then it’s normal to worry. Therefore, the best time to think about your child’s college venture is when they’re born.

Besides the 529 plan that we’ve discussed earlier, there are other, attractive tax-free college savings options to consider for your child:

  • State-sponsored plans (tax-free as long as the money is used for college costs)
  • Plans managed by a brokerage or mutual fund company (in league with state-sponsored plans)
  • Plans that let your child attend any schools of their choosing
  • Coverdell education savings accounts (which lets you contribute up to $2,000 a year in tax-free accounts, though has limits of $220,000 for couples filing jointly, and $110,000 for singles)

While these plans will not allow you to invest in art, or jewelry, some of these plans let you invest money in a portfolio of stocks and bonds. In turn, these stocks and bonds would gradually get more conservative as your child reaches the age where they can go to college or university.

13. Buying Life Insurance Willy-Nilly

While life insurance is desirable in today’s standards, it’s still important to do your research ahead of time. In fact, you wouldn’t want to be stuck with an insurance policy that won’t help you and your child the slightest, or would cost you a lot for the premium.

Therefore, it’s important to look for insurance that can help you in the following ways:

  • It’ll cover doctor visits and medical bills.
  • It’ll cover things like food and other necessities.
  • It’ll cover child care needs, and so on.

Also, don’t be tempted to buy a lifetime policy that can turn out to be costly, if your child develops a medical condition later in life. Buying a policy for less now will ensure that your child is always insured.

Remember: The last thing you want is to be stuck with an insurance policy that won’t help either you or your child.


Read more: Million Dollar Life Insurance – Do You Need It?

14. Ignoring Childcare

While giving birth can be costly by itself, so is childcare. Nowadays, daycare centers can cost an arm and a leg, in order for your child to go there for just one week. Plus, babysitters can be costly, even if you hire them to watch your child for a day.


The good news is, when it comes to childcare, there ARE options. Depending on your income, schedules, and life situations, you should research which childcare options are right for you. Would you rather pay for a daycare center to look after your child? Would you rather hire a babysitter to watch your child? Would you rather have a relative care for your child? Or, would you rather devote your time and energy on childcare? Whatever you choose for childcare is up to you.


Plus, think about why you’re in need of childcare:

  • Are you working full-time or part-time at a job?
  • Are you looking for work?
  • Are you working remotely, and need time to work?
  • Do you need a break from childcare every so often?

By learning how and why you need childcare, you’ll make the right choice when choosing what’s best for you and your child.


Also, look into parental leave in your place of employment. Just keep in mind: While some companies offer paid parental and or maternity leave, other companies won’t.  Therefore, it’s important to talk to your employer about your situation, and how you would like to better care for your child. Now, while unpaid parental leave is bare-minimum for your need to have childcare, you should still look for other options, if you can’t get paid while caring for your child.

15. Make Sacrifices

Finally, it’s time to talk about making sacrifices. As much as it sounds hard to do, it’s still a fact.


Yes, as new parents, you’ll be exposed to many changes in your life. For example, you might find yourself buying more Pampers and baby formula than recreational things like, say, alcohol and video games. That’s totally normal for new parents.


Making sacrifices will be something that you’ll need to do in order to afford things for your baby like clothes, food, medical expenses, and so on. And, just because you’re sacrificing one thing, doesn’t mean that you’ll need to do it forever. Though, if you manage to give up something (i.e., alcohol) for your child, then that might be a good thing.


Plus, when you look to make sacrifices, you’ll be able to teach your child to follow suit. In this way, they would learn how life works, and how they can work towards a goal. Again, while giving something up may seem hard to do, that’s life.


Read more: 14 Frugal Living Tips You Can Implement Today and Save Thousands



So, there you have it!


As you can see, being a new parent doesn’t have to be problematic or expensive at all. In fact, many of these mistakes can be avoided by NOT jeopardizing your finances. While not everyone is perfect when it comes to finances, it’s still important to look to the future, especially when it comes to your bundle of joy.


By learning from these 15 common mistakes in new parenting and finances, you’ll not only be smarter with your money, but also provide the best for your child.


Good luck, new parents!


This article originally appeared on The Financially Independent Millennial and was syndicated by MediaFeed.org.


More from MediaFeed:

More money mistakes you can avoid


Financial issues are often cited as a leading cause of divorce in the U.S., which means it likely makes sense for young couples to take a long, hard look at how money and marriage can work together. Many newly married couples make common money mistakes at first because they don’t think about and plan for important financial decisions.

This could include what you need to do to buy your first home or money moves to make when you’re young, especially if you’re young and married.

After you’ve said “I do” to your significant other, take certain steps to avoid these money mistakes newlyweds make. Doing so may bring you closer to achieving your financial goals.




It’s natural to feel like the money you earn and put into your savings account or checking account is yours. You may have been living like this for many years. But when you get married, you enter into a partnership with your spouse. You share things and work together to achieve common goals.

But if you don’t share your money, it can be difficult to share a feeling of cohesion and stay on the same page with your finances. Getting a joint account, such as a joint savings account, makes a lot of sense for married couples. You both get to contribute, if applicable, to your shared funds and it could make it easier for both of you to track your finances.

Use the best savings accounts to help boost your savings. These accounts typically outperform traditional savings accounts when it comes to how much interest you can earn over time.


If either party enters a marriage with pre-existing debt, it may be up to the both of you to work on erasing that debt together. This could involve dealing with student loans, credit card debt, or other types of debt. You may have promised to take care of each other, which includes being there for each other in a financial sense.

Becoming debt-free is important for anyone. But learning how to manage your money as a married couple can help strengthen your relationship and financial knowledge. In contrast, letting your spouse tackle their pre-existing debt without offering your support probably won’t foster a feeling of mutual understanding and kindness.




Newly married couples often have a million things on their minds, but retirement savings likely isn’t one of them. When you’re worried about buying a house, starting a family, or paying for your honeymoon, what time is left over to worry about retirement?

Unfortunately, it’s a good thing to think about sooner rather than later. Retirement planning doesn’t automatically happen as you get older, and it can get more difficult to save up the retirement funds you want the longer you wait.

Learn how to save for retirement today instead of putting it off for tomorrow.




Budgeting is essential if you’re newly married and working to achieve financial goals together. Creating your household budget typically consists of reviewing your monthly income, monthly expenses, and spending habits. Once you know what you have coming in and what’s going out of your budget, it’s easier to find areas where you can adjust things.

This can include cutting down on expenses, especially if you’re trying to achieve certain savings goals. You may not be able to remove necessary expenses, such as groceries, but figuring out ways to reduce your overall expenses can help you budget more efficiently. This is possible on your own, but using budgeting apps can help streamline the process


Extreme Media / istockphoto


The price of a home will vary depending on where you live and what you’re looking for. But no matter what, it’s unlikely to be cheap. In many cases, you’re looking at hundreds of thousands of dollars. Of course, if you’re saving up for only the down payment, it will be a lot less.

Let’s say you want a $250,000 home. It’s often recommended that you pay at least 20% as a down payment, which would be $50,000. If you want to buy a house in five years, you would need to save $10,000 per year or about $833 per month for five years. However, these calculations work only if you start saving right now.

In addition, it could help if you improve your credit score so you can qualify for loans from the best mortgage lenders.




If you’re planning on having a family down the road, your finances should be top of mind. But knowing how to save moneybefore you have a family is key. This could mean cutting down on costs in a variety of ways and places, such as your monthly utility or cable bills, groceries, or your cellphone.

If you can put aside money now into savings, you could potentially have a lot more financial stability when you add to your family. Consider the many costs associated with having kids, such as diapers, clothes, toys, food, entertainment, and much more. Now calculate how much that could all be and you’ll be in the range of what you need to start saving.




In addition to providing life’s necessities, you might also want to give your kids the opportunity to get a college education. It may seem like it’s far enough away to hold off on planning for it, but making the right moves now could potentially help you build a college fund over time.

When you first get married, you might not be able to afford much. So putting tens of thousands of dollars into a bank account for your kid’s future college education probably won’t be possible — at least not right away. But if you learn to budget and put away a little money at a time, your goal becomes more attainable.

For example, $100 a month for 18 years is $21,600. That’s nothing to sneeze at. But you can adjust the amount of money you save each month, especially if your income increases.


ChristopherBernard / istockphoto


Life insurance probably wasn’t more than a passing thought when you were single. But getting married and potentially starting a family means there are more people in your life to worry about than just yourself.

The purpose of life insurance is to make sure the people who depend on you financially will be taken care of if you die. The money from life insurance can help cover lost income, pay for funeral expenses, and give your loved ones time to grieve instead of having to worry about finances.

See our list of the best life insurance companies to find a policy that fits your situation. Keep in mind that life insurance is typically more affordable when you’re young.




Drafting a will has a similar purpose to getting life insurance: You want to make sure everything is taken care of financially if you die. However, a will is more about who gets what instead of a beneficiary receiving a certain amount of money from a death benefit.

This is important because the state you reside in will decide what happens to your money, property, and assets if you don’t have a legally binding document (aka, a will) to dictate your wishes. If you want everything divided according to your wishes, get a will drafted up and set in place.




Money can be a hot topic, and it’s a subject some married couples don’t want to bring up. But avoiding honest conversations about how you’re going to handle financial decisions in your marriage isn’t a solution that’s likely to pay off.

It might be difficult to approach, but sit down with your spouse and discuss your finances. Make sure it’s an honest but productive conversation. The purpose is to help each other set goals and then encourage each other to reach them.




Starting a new life together may coincide with moving into a new place or starting to live together. This can prompt a desire to make changes in your home, like upgrading your furniture and home decor. Although it sounds exciting, and you might be riding the excitement of getting married and going on a honeymoon, home furnishings can be expensive.

Purchases for new couches, tables, paint, chairs, and other home decor items will quickly add up. It’s tempting to have everything be brand new and to make big, dramatic changes after such a huge life event. But spending money on unnecessary things may not create the best financial situation to start off your marriage.

Instead of spending money, focus on budgeting and saving your money.




Learning how to manage your money doesn’t happen overnight. And sometimes it makes sense to seek additional help. If you feel like you could use some financial guidance, work with a financial advisor to help you establish a clear path.

Financial advisors can vary depending on their specialty. Before going with the first financial advisor you see, be sure they have the knowledge and experience to help with your unique situation. This could include experience with tax planning, investment management, budgeting, getting out of debt, and more.

It may be an investment to hire a financial advisor or planner, but if it teaches you important financial lessons you can use for the rest of your life, it could be worth it.




Everyone makes mistakes, especially when you’re adjusting to new circumstances or going through a learning process. But that doesn’t mean you can’t prepare yourself ahead of time to make as few mistakes as possible. And that includes learning how to manage your money as a newly married couple.

Take money tension out of your relationship by setting and working toward financial goals together. This will help you increase your overall financial awareness and keep you both on the same page when it comes to shared money. Not to mention, you’re likely to have increased financial stability years down the road if you work to avoid money mistakes now.


This article originally appeared on FinanceBuzz.com and was syndicated by MediaFeed.org.





When it comes to one’s finances, bad decisions can have a snowball-like effect. If you start off the year forgetting a payment here and there, being disorganized with your taxes or failing to contribute to your retirement accounts, you’re setting yourself up for a disorderly financial life in 2019.

There are a handful of common financial mistakes people make at the beginning of the year that can be prevented with just a little effort and foresight. Start the year off on the right foot by avoiding these common missteps.




Luis Rosa, a certified financial planner with Build a Better Financial Future in Henderson, Nev., said one of the biggest financial mistakes people make at the beginning of the year is not planning ahead.

“People just fail to plan overall sometimes,” Rosa said. “[If] you don’t have a plan, then you’re just like a ship without a rudder … at the beginning of the year, sit down and see what the goals are that you want to accomplish.”

Kristi Sullivan, a certified financial planner based in Denver, said she often gets phone calls at the beginning of the year from people who might have contacted her months ago, but never followed up for an appointment. “They want to start the year off right,” Sullivan said.

Whether it’s by yourself or with the help of a financial planner, figure out what you want to accomplish in 2019. Do you want to save more money? Pay off a significant amount of student loan debt? Purchase your first home? Build up your emergency fund? Whatever your financial goals are, January is the perfect time to set them.




Sullivan said January is the perfect time to reassess any automatic savings you’re making, and increasing them, if possible. “If you put another 2% in your 401(k) at the beginning of the year, that’s done for you,” she said. “You don’t ever have to think about it again — you implemented a good savings habit.”

You could also increase the amount you move each month from your checking account to your savings account. “Just set up those automatic good behaviors so you don’t really have to think about them, and watch those actions build over time,” Sullivan said.




Rosa said people will often fail to realize that certain retirement account contribution limits have changed. For example, the Roth IRA contribution limit is now $6,000 as opposed to $5,500, so somebody who has a Roth IRA could raise his or her monthly contributions at the beginning of the year to plan ahead, Rosa said. (For 401(k)s, the limit will change from $18,500 to $19,000 in 2019.)

Automate your retirement savings at the beginning of the year to ensure you’re putting away the maximum amount possible each month. Rosa notes that on the IRA side, you do have until the tax deadline to contribute to the prior year. “But life gets in the way,” he said. Organizing your contributions in January will give you peace of mind for the year ahead.

The beginning of the year is also a great time to reassess your 401(k) allocations, Rosa said. For example, you might have initially allocated 60% for stocks and 40% for bonds in your portfolio.

“During the year, things change, so maybe stocks went up and bonds went down,” Rosa said. “At the beginning of the year, it’d be a good idea to go back in there [and] see how your account performed for the year.”

If necessary, you can make any changes that will get your portfolio closer to what you want.

In addition, Rosa recommends taking advantage of your company’s employer match if you haven’t already.

“Sometimes, it’s a good idea at the beginning of the year to be like, ‘OK, this will be one of my goals: to increase to at least the employer match,’” Rosa said. “And just get it done starting with the next pay period.”


There’s no harm in getting an early start on your taxes. Gary Schaider, a certified public accountant and manager at Weiss & Company LLP in Glenview, Ill., said one way you can be proactive is by getting organized.

Account for anything that might affect your tax situation that you didn’t get in the mail from the government. This could include things like business expenses, charitable contributions and anything else that might be deductible.




Schaider said one of the immediate things you can do in 2019 is look at your tax withholdings.

“One of the things I think most people don’t look at enough is what you’re doing as far as your income tax withholding at your job,” Schaider said.

This is imperative because of the new tax laws and the ways in which rates, exemptions and withholding amounts have changed, he said. “People need to revisit company exemptions they’re claiming on their W-4 and what their withholding looks like,” Schaider said.

Make sure you’re not taking out too much or too little. “You should probably do that early in the year rather than late in the year when it’s too late to do anything about it,” Schaider said.

In addition, sometimes people will have a major life event, like a marriage, divorce or the birth of a child, that can affect their tax bracket, Rosa said. If this applies to you, fill out a W-4 form in January to make any necessary adjustments.




Perhaps you got married in the previous year. Did you remember to change your life insurance beneficiary from your sibling to your spouse? Or maybe you had a child or got divorced. The beginning of the year is a great time to double-check that your beneficiary is correct.

“I’ve met several people that have their brother or sister on their life insurance, and they get married and just completely forget to add their spouse,” Rosa said. “So it’s a good time to reflect on what changed this year.”


gregepperson / istockphoto


Sullivan said the new year is a great time to finally get your accounts organized. Perhaps you have an old 401(k) and various other accounts scattered about. Take 2019 to get your money organized.

“Streamline it and consolidate accounts,” Sullivan said. “That can be one [thing] that people really want to do — almost like cleaning out their closet, [but] organizing their finances.”




Right after the holidays is the perfect time to finally begin paying off debt. Perhaps you overspent during the holidays. Or maybe you’re just sick of mindless online shopping. Take January to get a debt repayment plan in place.

“You’re sick of shopping, you’re sick of spending money,” Sullivan said. “So it might be kind of a natural time to sort of hunker down and pay off some credit card debt.”

Take January to create a debt payoff plan for the year ahead. You’ll thank yourself come 2020.




January is a great time to look at your investments and make any necessary changes.

“I think at the beginning of the year, it’s good to look at what your money is invested in,” Schaider said. “Is it all in the market? Is it in cash? Is it in safer things or riskier things?”

You should definitely look at your investments if you had a major life change in the previous year. For example, perhaps you had a child and you don’t want to be as risky with your investments in 2019. “You might want to change your strategy,” Schaider said.




Although the new year can leave you feeling motivated, be sure you don’t set lofty goals that will be difficult to achieve. After all, 80% of people fail to maintain their New Year’s resolutions by the second week of February.

“Don’t think that you’re going to take January and make sweeping, overarching changes to your financial life,” Sullivan said. “Pick one or two things that you can really accomplish, pat yourself on the back and move on to the next.”

This article originally appeared on MagnifyMoney.com and was syndicated by MediaFeed.org.




Featured Image Credit: monkeybusinessimages / istockphoto.