Skillsoft will be unavailable from 7 a.m. to 7 p.m. Saturday, June 23, while Skillsoft Cloud Operations conducts routine maintenance.
A great way to begin this process is to identify all sources of income. Start the process by looking at each of your pay stubs and noting gross pay and all deductions. In addition, be sure to look at your current W-4s. In this way, you can develop a comprehensive understanding of your household income.
As you may know from experience, raising a child is an expensive endeavor. The United States Department of Agriculture’s Cost of Raising a Child Report (released in 2013) asserts that “middle-income parents with an annual income between $60,640 and $105,000 can expect to spend $241,080 ($301,970 adjusted for projected inflation)” from birth till the age of 18 for a child born in 2012. In light of this projection, it follows that the average annual expense for a family of the aforementioned income bracket is $13,400 (not accounting for projected inflation).
To help you and other parents estimate the annual costs associated with raising children, the United States Department of Agriculture (USDA) has created a “Cost of Raising a Child” Calculator. The educational tool is based on 2012 figures and allows you to enter information (e.g. number of children, region of the country, etc.) that applies to you and your family.
- Take stock of your household's income
Use this worksheet to create a summary of your household’s income sources. Start with paychecks from employers and then move to income from other sources.
As having a child impacts your discretionary money and household expenses, be sure to review your spending habits in light of this change. In turn, you can develop a budget and plan for reaching your financial goals.
Though it can be tedious, tracking expenditures sheds light on your expenses and spending behavior. Gaining such clarity is particularly important in planning for your child’s needs. Further, categorizing your spending provides the details that you need to know what you are doing (or can do) to achieve your financial goals.
- Gather your statements.
Obtain copies of banking and credit card statements for 3 months. Also gather a recent pay stub if you are paying for health insurance directly out of your paycheck.
- Categorize your spending.
Complete a Spending Chart for the last three months. If you share your household expenses with another adult, ask him/her to also complete a spending chart. Record the average amount spent over that time frame.
- Review household spending.
For each general spending category, add together your individual monthly spending to get the household’s estimate monthly spending. Later you can use this as the basis for making a budget for your household.
- Review household bills.
Review household bills and consider which ones can be eliminated or combined (e.g., cellphone “family” plan, bundling vehicle insurance). Determine which bills will remain. If you anticipate new household expenses (e.g., childcare expenses, school tuition), be sure to make a note of them.
Have you reviewed your credit history lately? If you are coupled, has your partner reviewed his/hers? As you begin to get your "financial house" in order, it is important to take stock of your credit history. Your credit history highlights your past or current borrowing behavior, and it influences your ability to borrow in the future.
- Obtain a copy of your credit report and review it for accuracy.
The Fair Credit Reporting Act (FCRA) entitles you to a free credit report annually from each reporting agency. In order to request your free report(s), visit http://www.annualcreditreport.com.
The three credit bureaus from which you can request reports are:
- Equifax (1-800-525-6285)
- Experian (1-888-397-3742)
- TransUnion (1-800-680-7289)
Here’s what to look for as you review the report:
- Late payments on accounts
Were you delinquent in making payments?
- Debt-to-credit limit ratios
What is your debt compared to available credit on revolving accounts (e.g., credit cards)?
- Collection activity
Has a delinquent payment gone to collections?
- Bankruptcies, liens or judgments
Notice if major financial challenges are listed on your credit report.
- Active accounts
Are there active accounts that you never closed? Or opened? Verify that accounts that you closed are, indeed, closed. If there are accounts open that you never opened, contact the credit reporting agency.
Review who has requested your credit file.
- Review all of your loan and credit card statements.
From your current statements, make a list of your outstanding balances, monthly payment amounts, interest rates, and estimated payoff dates for each type of debt/liability that you have.
John Lennon once said, “Life is what happens to you while you're busy making other plans.” And sometimes the unexpected happens while you’re busy living life. Setting aside some of your income is a great way to prepare for the unexpected and reward yourself for your hard work. Saving money also allows you to achieve your financial goals. As you take steps to boost your family’s financial health, it is important to review the role of savings in your plans.
- Gather your statements.
Obtain copies of bank statements from your savings accounts.
- Review individual saving behavior.
Review saving behavior. Do you have an established behavior of setting money aside in a savings account? Do you only save money on occasion? Is saving an integral part of your monthly budget? Are you saving money through direct deposit of your paycheck?
- Review household saving behavior.
If you are sharing household expenses with someone, review your collective saving behavior. Does one of you tend to save more than the other? Are you actively seeking ways to grow your savings? How much money are you currently saving on a monthly basis?
- Gather your statements and account information.
Obtain copies of statements from your investment accounts. If your employment history includes working for several employers, each of which provided you a pension, 401(k), 401(a), or 403(b) plan, it is important for you to find out “where your money is” by gathering account information for each plan.
- Gather information regarding your current contributions to and/or account balance in your retirement plans.
If you are a CU benefits-eligible employee, you can log in to the employee portal and review the "Benefits Summary" and "Retirement Contributions" sections tto see your contributions to the 401(a) Plan or PERA.
- Review current contributions to your retirement plan, voluntary retirement savings plan, and other investment tools such as a Roth Individual Retirement Account (IRA).
Are you actively seeking ways to invest monies and prepare for retirement? Is there additional disposable income in your budget that can be allocated for investing?
- Gather documents and account details for all financial accounts.
Gather and compile information on all financial accounts. Ensure that you can access accounts that you have created online.
- Gather information regarding coverage and costs of health insurance plans offered by your employer. If you are in a committed relationship, encourage your partner to do the same.
Ensuring that you and your family have health insurance is essential to caring for your family’s physical, emotional, and financial wellness. When adding or removing a dependent from your (or your partner’s) health insurance plan, it is a good idea to do an audit of your coverage. As you review your coverage, be sure to consider the following items:
- Have you completed the paperwork required to add or remove a dependent?
- If you are married, have you considered whether it is more cost-effective (assuming equal level of coverage offerings) for:
- you and your dependent to be covered under your partner’s plan,
- your partner and dependent to be covered under your plan, or for
- you and your partner to maintain individual coverage and add your dependent(s) to one partner’s plan
Benefits-eligible employees can find information on the health care plans that the University of Colorado offers on the Employee Services' medical benefits Web page. Be sure to review costs for individual coverage, Individual + coverage for dependents, and coverage for individual + dependents + partner. (Note: while a new baby can be added as a dependent on your existing coverage, you can only change your plan during Open Enrollment and can only add a spouse/partner when a qualifying event occurs or during Open Enrollment).
- Gather names of individuals currently listed as beneficiaries on all financial accounts and life insurance policies.
Review each financial account and life insurance policy to ensure that you have designated a beneficiary for each. A beneficiary receives certain plan benefits after the owner of such policy dies. By designating an individual(s) as the beneficiary of your retirement plan(s) and life insurance policy (if applicable), you are ensuring that the benefits of these plans are distributed to the person(s) of your choice. For assistance with estate planning, please view the Estate Planning Checklist.
- Gather the policy information for renter’s/homeowner’s, car, and life insurance.
Gather and compile information on insurance policies. Review current coverage and consider the need to increase coverage.
- Take stock of any employer policies or benefits available to you.
You may wish to learn about how Family Medical Leave works, review the coverage on your short term disability policy (if applicable), or investigate dependent care flexible spending accounts.
- Share your taking stock results.
Review your pay stubs and W-4s. If you are in a committed relationship, share the results with your partner. Consider and/or discuss sources of income and whether they vary (e.g., bonuses, paid overtime) or are constant (salaried wage). Consider the amount and regularity of other sources of income such as child support, pension benefits, Social Security benefits, rental income and business income.
- Discuss any changes to income.
As you take stock of your household income, be sure to discuss any changes to jobs/income that you foresee in the near future (e.g., Will you or a partner be a stay-at-home caretaker for kids or aging parents? Do you anticipate a raise or promotion?)
- Consider changes to the taxes withheld from your paychecks.
Though it is not the most exciting way to spend time, it is a good idea for you to spend some time reviewing a W-4 to determine how you will complete the form. Giving up a little time to sort this out now will likely enhance your financial situation at tax time.
The most important topic to consider is your strategy for withholdings. Specifically, you will want to consider whether you want to try to estimate your tax liability as close as possible and pay that amount during the year or whether you’d like to err on the side of overpayment (to get a refund) or underpayment (to keep more money from each paycheck but possibly have to write a check in April). If you are legally married, be sure to consider the “married but withhold at the higher single rate” option. Generally, there is a lower withholding rate for people who qualify as "married." Thus, the “married but withhold at the higher single rate” minimizes the chance that insufficient tax is withheld.
If you and a spouse work, be sure to review the “Two-Earners/Multiple Jobs Worksheet” on page 2 of the W-4. This worksheet will help you to ensure that sufficient tax is withheld. Though it’d be nice to have additional money on each paycheck, ensuring that sufficient tax is withheld minimizes the chance of having a large tax liability upon filing your income taxes.
Be sure to note that you can add one allowance for each dependent. You may review the guidelines for claiming an exemption for a dependent. Further, if you meet specific income requirements and are eligible for the Child Tax Credit, you may take additional allowances for dependents. Please note: This information is for general reference purposes only. Only a qualified tax professional can give you tax advice on your situation.
- Start thinking about your tax-filing status.
Consider the tax filing status that best describes your situation by reviewing the following facts:
According to the Internal Revenue Service (IRS):
- If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
- "Single" filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
- "Head of Household" generally applies to taxpayers who are unmarried. You must have also paid more than half the cost of maintaining a home for you and a qualifying person (dependent such as a child or parent) to qualify for this filing status.
- Your marital status on the last day of that year determines your marital status for the entire year.
What does this mean? It means that if you were not married on the last day of the tax year for which you are filing, you and your spouse cannot claim the "Married Filing Separately" or "Married Filing Jointly" status.
- A married couple may elect to file their returns separately. Each person’s filing status would be "Married Filing Separately." See more information on this filing status.
- A married couple may file a joint return together. The couple’s filing status would be "Married Filing Jointly." See more information on this filing status.
Upon review of the requirements, benefits, and drawbacks of income tax filing statuses, select the filing status that best fits your situation. Please note: This information is for general reference purposes only. Only a qualified tax professional can give you tax advice on your situation.
- Consider tax credits for which you may qualify.
- Child and Dependent Care Credit
You may be eligible for the Child Tax Credit. For more information about the Child Tax Credit, check out “Ten Facts about the Child Tax Credit.” You may also want to view detailed information about the Child and Dependent Care Credit.
- Earned Income Tax Credit
You may qualify for the Earned Income Tax Credit (EITC). To learn more about the EITC and determine if you qualify, visit the IRS' "Do I Qualify for EITC" webpage.
- Adoption Credit
If you have adopted a child, you may qualify for an Adoption Credit. Learn more about this tax credit, and see if you qualify.
- Education Credits
For more information on tax benefits for education, please review Publication 970 and visit the Tax Benefits for Education Information Center.
- American Opportunity and Lifetime Learning Credits
In addition, be sure to review Form 8863 on Education Credits (American Opportunity and Lifetime Learning Credits) for more information on tax credits based on qualified expenses paid to an eligible postsecondary institution.
- Child and Dependent Care Credit
- Discuss money with your child(ren)
Colorado Financial Literacy
Personal Financial Literacy Expectations
Council for Economic Education
Whether it is through birthday gifts, allowance, or “spending money,” most kids receive “income” and develop a relationship with money at an early age. Helping your son or daughter to make sound financial decisions is an important part of developing his or her lifelong understanding of and relationship with money. If you need a little help in talking with your kid(s) about money, check out the following sites for information and resources:
- Consider current spending.
Determine if you have individual or household spending habits. Look for ways to trim expenses and save money. Consider if there are bills that can be combined or eliminated.
- Consider setting money aside in a flexible spending account (FSA).
Flexible spending accounts (FSAs) allow you to set aside pre-tax dollars for use in certain situations. The money in these accounts can be used to pay for medical purchases (e.g., coinsurance, deductibles, copays) and to pay for dependent care (e.g., child care, elder care). Money that you put into your FSA is not subject to payroll or income tax.
- Take the Life Values quiz.
Grow awareness of your financial values and habits by taking the Life Values quiz. Upon completion of the quiz, check out a description of each life value.
Why take the quiz?Growing awareness of your own value system and behavior is the first step in building understanding of your spending habits. Over the course of your childhood, you learned values and developed habits in regard to money. You may have learned these explicitly from family members or a class in school or implicitly by listening to conversations or watching the behaviors of family members and friends. No matter how, where, or what you learned, by this stage in life, you have developed your own set of financial values and habits. Thus, in order to better understand yourself and find successful ways to navigate financial decisions, it is important that you explore your respective financial values and habits. After taking the quiz, encourage your partner (if applicable) to do the same.
- If you have a “boomerang kid,” discuss spending arrangements.
What is a "boomerang kid"? "Boomerang kid" is a term used to refer to a young adult who, like a boomerang, leaves home to venture into adulthood to later return to where he/she started. A young adult's decision to cohabitate with his/her parents after a period of living on his/her own can cause disruption in his, her, or the parents' daily lives. Further, it can create challenging financial circumstances for parents. As financial struggles are primary reasons for their return home, “boomerang kids” often have little financial means to contribute to the family’s expenses. Thus, parents of such children often find the demand for increased financial support a burden on their own finances.
If you no longer have an "empty nest" and find yourself parenting a "boomerang kid," you may be feeling caught between the desire to invest for retirement and the call to support your adult child. It will help your cause and that of your child if you take a few, important steps. These steps center on having meaningful discussion(s) with your son or daughter.
Topics to Discuss
- Discuss and establish expectations for house rules, household chores and household costs.
- Work collaboratively with your son/daughter to establish a plan for him/her achieving a financial foundation that will afford him/her the opportunity to establish independence and simultaneously manage financial obligations such as student loans, credit card debt, and cost of living expenses.
- Outline short- and medium-term goals.
- Discuss the time frame needed for your child to reach short- and medium-term goals.
- Resist the temptation to pick up your son or daughter’s financial slack. Maintain boundaries and refrain from enabling behaviors that do not support your son or daughter’s independence or financial goals.
- Discuss your son's/daughter's contributions to and responsibilities for household spending.
- Consider budgeting and spending goals.
Reflect on current spending and brainstorm financial goals for near and long-term. Consider ways to modify current spending behavior in order to achieve financial goals. Generate ideas for lowering expenses associated with certain bills (e.g., electricity, cable television, water usage).
- Consider important facts about individual and joint credit.
Things to consider about individual and joint credit:
- Individual credit is only based on the individual applicant’s credit history, income, and assets. This person alone is responsible for paying the bill.
- Joint credit is based on the credit history, income, and assets of both individuals who apply for credit.
- With joint credit, both individuals can make charges on the card and the credit card history is included on both parties’ credit report.
- With joint credit, both individuals are liable for the credit card payments. If the payments are delinquent, the credit card issuer can hold either cardholder responsible for payment.
- With joint credit, both individuals are liable for 100% (not 50%) of the bill.
- With joint credit, both individuals will be responsible for the debt in the event of divorce.
- You may authorize a user on an individual or joint account. An authorized user is someone who may use the account with your permission. However, you (and the joint account holder, if applicable) are solely responsible for the debt.
- Joint credit history does not exist. Even if you are legally married, you still have separate credit histories. However, any debt(s) that you have acquired or applied for jointly with another person will be included in your individual history. The entire (100%) debt (not 50% of it) is included in your history.
- Consider your family’s future borrowing needs (e.g., vehicle, house) and how you might approach them.
If your teenage or adult child needs to borrow money, be sure to take some time to consider how your family will approach the loan application and resultant debt. Specifically, in addition to reviewing your budget(s) and researching potential lenders, you will want to determine if:
- one of you will borrow individually.
- one of you will co-sign on a loan held in the other's (the borrower) name.
- both of you will be primary borrowers ("co-borrowers") of the debt.
This consideration is an important one if your son or daughter wishes to borrow money to purchase a vehicle. If you plan to assist your child in securing a loan, be sure to consider and educate your child about the implications of borrowing with another individual.
- Discuss implications of borrowing together. Consider co-signing and co-borrowing.
If you and a partner decide to borrow together, you will have two borrowing options available to you. One of you can co-sign on a loan in the other’s name or you can borrow together. It is important to note that if you are a co-signer or co-borrower, you are liable for payment of the debt.
If your child wishes to borrow money (e.g., for a vehicle), it is unlikely that s/he will be eligible to be a sole borrower. A lack of or very limited credit history will prevent him/her from doing so. As such, you will likely review alternative financing options for him/her. As you do, be sure to consider the implications of and differences between being a co-signer and co-borrower of a loan.
What is a co-signer?In essence, the co-signer serves as a "back-up”" for the borrower. A co-signer assumes responsibility for the debt should the borrower default. If the primary borrower dies, loses a job, or misses payments, the responsibility falls on the co-signer. Given the liability for the loan, the co-signer must be able to qualify for the loan on his/her own merit. A lender will review the co-signer’s credit history, assets, and income along with the borrower’s. A co-signer often has a strong, established credit history.
The co-signer “lends” his/her credit history to the borrower so that the borrower may have increased eligibility for credit. Co-signing on a loan offers the borrower the opportunity to leverage the combined income of the borrower and co-signer to, in turn, qualify for a larger debt load (and likely a lower interest rate) than could be obtained individually.
Though the co-signer assumes liability of the loan, s/he does not assume ownership of the item being purchased. As the loan account is in the borrower’s name, the borrower, not the co-signer, has ownership of the purchase (e.g., vehicle).
If you are considering co-signing on a loan, please note that co-signed debt is included in your total debt obligation. It is Important to remember this if you need or plan to apply for credit in your own name. For even if the co-signed debt is in good standing, the debt-to-income ratio that results from it may limit your access to credit. Further, though you do not have rights to ownership, you do carry the associated debt and payment activity in your credit history.
What is a co-borrower?A co-borrower is any additional borrower whose name appears on loan documents. All persons listed on loan documents are obligated to repay the loan. The co-borrower assumes liability for the loan and ownership of the purchase. (The names of co-borrowers for mortgages/vehicles appear on the title.)
The credit history and income of both borrowers are used to qualify for the loan. Unlike a co-signer, a co-borrower does not need to qualify for the loan on his/her own. Combining income and assets on a loan application often allows co-borrowers to meet the lending criteria of creditors.
Important ConsiderationIf you require co-signer to be eligible for a loan, consider taking small steps to enhance your credit score. Such steps might include securing a credit card or small dollar loan and making timely payments and/or paying it off ahead of schedule. By staying current on payment obligations and showing sound management of credit, you will gradually increase your credit score and further enhance your access to credit.
- Brainstorm goals for managing debt.
Develop goals for managing and paying off debt. Consider ways to increase amount of payments made on monthly obligations.
- If applicable, consider the role of borrowing in financing your child's college education.
Federal student loans, grants, and other types of financial aid are available through the federal government. Find more information about types of and eligibility for financial aid.
Student loan interest may be deducted when filing federal income taxes. See more information on eligibility and permissible amount.
- Consider opening an individual savings account.
If you do not have a savings account, consider opening an individual account.
- Consider opening a joint savings account.
If you are in a committed relationship and you and your partner do not have a joint savings account, consider opening a joint account. Discuss how much money each of you will contribute to the account and how frequently money will be deposited into the account. Be sure to establish guidelines for use of the account. Setting clear, mutually agreed upon expectations for the account and withdrawal of funds minimizes the chance of tension or misunderstanding.
- Consider including your savings account(s) in direct deposit of your paycheck.
Review your monthly budget to determine how much money you will deposit into a savings account each month. Consider adding the savings account(s) to the direct deposit of your paycheck. In this way, saving becomes an automatic part of your regular financial behavior.
- Consider saving for an emergency.
Developing an emergency savings fund is an important component of building a solid financial foundation. Having money set aside for emergencies will allow you to navigate unexpected situations such as vehicle or household repairs with greater peace of mind and minimal impact on other areas (e.g. credit cards, retirement accounts) of your financial foundation.
It is important to determine how much money you will set aside for emergency savings. This decision is unique to every individual and couple. However, in the event of a lost job or layoff, it is a good idea to save sufficient money to live without that income for 3-6 months.
For guidance in determining how much money you will need to set aside for an emergency fund, review the Emergency Fund Worksheet at smartaboutmoney.org.
- Consider opening a savings account dedicated solely to emergency savings.
- Consider opening a savings account in your child’s name or helping him/her to open one.
- Consider options for saving for your child’s college education.
There are numerous options from which you can choose to plan, invest, and save for your child’s postsecondary education. No matter which option(s) you choose, the sooner that you start saving, the better.
Coverdell Education Savings Account
The Coverdell Education Savings Account (ESA) is an investment account that carries tax advantages. Unlike a 529 plan, a Coverdell Education Savings Account can be used to pay for qualified expenses for primary and secondary school. As Coverdell Education Savings Accounts (ESAs) have lower maximum contribution limits ($2,000/year) than 529 Plans, be sure to review the IRS guidelines.
529 Plans529 plans are state or institution-sponsored savings plans designed to facilitate saving money now for the future costs of a college education. They also carry tax benefits.
There are two types of 529 Plans:
It is important to note that there are contribution limits on 529 plans. Information on these limits and other aspects of 529s can be found on the IRS website. Funds that have been contributed to a 529 will not incur federal or state taxes as they grow. Additionally, you will not pay federal or state tax when you take the money out so long as it is used for a qualified educational expense (e.g., tuition). States have different rules about taking tax deductions on contributions. Be sure to carefully review the specific rules of any plan you are interested in and the state regulations associated with it. You can compare plans within a state using this tool from the College Savings Plans Network.
529 plans in the state of Colorado are administered by CollegeInvest. CollegeInvest is a not-for-profit group within the Colorado Department of Higher Education. While these plans are sponsored and approved by Colorado, you do not have to use the 529 savings for a school located in Colorado. The 529 funds can be used at any eligible college, university, community college, trade or vocational school. It is important to note that signing up for a non-Colorado plan may prevent you from taking the Colorado state income tax deduction on contributions.
Be sure to view the following sites for additional information:
- College Savings Plans Network
- Comprehensive Set of 529 FAQ
- CollegeInvest FAQ
- FAQ Relating to Tax Treatment
- Fees Associated with 529 Plans
- Comprehensive Guide-Saving for College
Please note: The university has compiled these resources for employees interested in 529 college savings plans. The university does not sponsor or endorse any specific plan. Employees are free to choose the plan that best suits their family’s needs. In addition, only qualified tax professionals can give you advice on your specific tax situation. This information is for general purposes only.
- Consider meeting a financial professional to discuss your plan for saving for your child’s education.
Tuition costs continue to rise at a high rate, often rising faster than inflation. If you start saving early in your child’s life, you may wish to invest monies in diverse financial instruments, some (e.g., stocks) of which have a higher rate of return (and risk!). In turn, as the time draws near for your child to enroll in college, you can move money from the high risk instrument into one that holds lower risk. The age of your child when you start saving and/or investing for higher education is a key factor to consider in the selection of financial instruments. In order to determine the best financial instruments and asset allocation for your goals, be sure to schedule a one-on-one consultation with a financial advisor. Visit the Financial Wellness site to learn more about the expert guidance available to CU employees.
- Consider scheduling a 1:1 meeting with a financial professional to discuss your financial and investment questions.
Consider meeting with a financial professional to review your financial goals, budget, current investment allocations, and plan for retirement. CU employees can meet with financial professionals for one-on-one consultations. View the Personal Financial Consultations section of the website for more information.
- Consider consolidating your investment monies from retirement plans from past employers.
Consider the option of “rolling over” the monies into one account.
- Consider additional retirement savings plan options. Review your budget and financial goals to determine the feasibility of saving more for retirement. The University of Colorado has three voluntary savings plans available to most employees. The voluntary savings plans are defined contribution plans of an individual account, which you create to set aside money on a pre-tax basis through a salary reduction agreement with the university. Your benefits are based on the contributions credited to these accounts, plus or minus investment gains or losses. Visit the Voluntary Retirement Savings Plan webpage for more information.
- Consider where and how you will safeguard sensitive financial documents and account information.
Staying organized and maintaining the security of sensitive financial information minimizes the threat of identity theft. Further, storing important documents in a secure, single location ensures that all important information will be intact and accessible should an emergency arise.
- Consider the costs of and coverage offered by each health insurance plan available to you (and your partner, if applicable). Review the costs of adding dependents to each plan available to you.
Review the health insurance plans offered by your employer and that of your partner (if applicable). Be sure to compare coverage offered by each plan and the costs (Individual, Individual +Dependents, and Individual + Partner+ Dependents) associated with each. If you are in a committed relationship, determine if you and your partner will maintain individual plans through your respective employers and add your dependent(s) to one of those plans or if you will add one partner and dependent(s) to one person’s plan. (Note: you can only add a spouse/partner to your plan at Open Enrollment unless there has been a qualifying event that would make the spouse/partner newly eligible to be added to your coverage).
- Consider the individuals currently listed as beneficiaries on all financial accounts and life insurance policies.
Consider whether the names of beneficiaries on accounts and policies need to be changed or updated. Please note that some retirement plans require that the spouse be named the beneficiary unless he/she signs a written waiver consenting to the choice of another beneficiary. As you decide beneficiaries, please note that that in some cases there are tax implications for the beneficiary. Check with your financial provider or plan administrator for details. For additional assistance with estate planning, please view the Estate Planning Checklist.
- Consider purchasing life insurance.
As you plan for your child’s present and future needs, it is important to consider life insurance as a means of support for your child should something happen to you. A life insurance policy can provide you with peace of mind and surviving members of your family the financial support they need. Visit this link for more information.
It is important to note that life insurance companies do not distribute life insurance monies to minors. If your child is a minor, you will want to name an adult whom you trust to be the beneficiary of the life insurance policy. Another option is to create a trust as the beneficiary of the policy. For more insight and guidance on such a matter, you may wish to consult an estate attorney. A legal professional can help you decide the best course of action.
- Determine changes to your W-4s.
Pull out the copies of your current W-4s you obtained from your employers (you did this in the Taking Stock section). Then print out blank W-4s to work through together at home.
Follow the instructions for each person to complete a “practice” W-4.
You can claim one allowance for yourself and one for a spouse. If you are legally married, you may, depending on the amount of your joint income, be able to claim additional allowances. If you have children, you can add one allowance for each dependent. If your income is less than a certain threshold and you are eligible for a Child Tax Credit, you may take additional allowances for dependents.
If you plan to itemize or claim adjustments to your income, be sure to follow the guidance on the "Deductions and Adjustments Worksheet" on page 2 of the W-4.
For additional support in determining the number of withholding allowances, check out the Withholding Calculator offered by the Internal Revenue Service (IRS). Please note: This information is for general reference purposes only. Only a qualified tax professional can give you tax advice on your situation.
- Contact your employer to update your W-4.
Contact your employer directly for instructions on how to update your W-4 form.
As you develop a financial plan, remember that, no matter which way you look at it, you WILL spend money. It is not realistic to develop a financial plan that does not account for this truth. For developing and executing a successful financial plan is an important, ongoing exercise that does not address IF you will spend, but rather ON WHAT and WHEN you spend money.
- Write spending goals.
It is important to write down your financial goals. Get a pen and some paper and be sure to make your goals SMART!
What are SMART goals?They are:
- Specific: I will pay off my credit card in two months by paying X dollars this month and Y dollars next month.
- Measurable: I will pay an additional $50/payment on my student loan bill for the next 6 months.
- Attainable/Achievable: I will save $10/week. (I will forego two coffees/week at Starbucks and instead place $10 in my savings jar.)
- Realistic: I will work on paying off my auto loan ahead of schedule by including an additional $50 on my monthly payment.
- Time-Bound and Trackable: We will save $2,000 for a vacation by saving $200/month for the next 10 months.
As you develop your SMART goals, remember to think of them of them in regard to the time frame in which you plan to achieve them.
Short-Term Goals: Achievable in fewer than 3 months
Medium-Term Goals: Achievable from 3 months to 3 years
Long-Term Goals: Require 3 or more years to achieve
If you need a little boost with outlining your goals, be sure to check out the Ten Basic Steps Worksheet from smartaboutmoney.org.
- Make a new budget.
Implementing a budget is an integral part of managing spending decisions and behavior. Determine how much of your income will be allocated to household expenses, childcare, saving, investing for retirement, entertainment, and incidentals. In order to advance your spending goals, be sure to find and “plug” the leaks in your spending pipeline. Use the Plug Spending Leaks Worksheet to guide your review of potential “leaks” in your spending.
Monitoring where your money goes is an excellent way to determine how you are spending your money and whether or not these expenditures support your financial goals. Use the Spending Diary and the Tracking Your Expenses worksheets to guide you as you track your spending.
- Eliminate or combine bills.
Eliminate or combine bills where possible.
- Pay off credit accounts and close them (as applicable).
- Write down SMART goals to manage existing debt.
- Develop a plan for paying off individual and shared debt obligations.
You may wish to prioritize debt obligations by those that you share with a partner and/or by the amount owed. Regardless of the approach, it is important to develop a strategy for handling debt obligations.
- Open an individual savings account (if applicable).
Select the financial institution with which you’d like to bank. Go to the financial institution with personal identification and a check or cash to make the initial deposit.
- Open a joint savings account (if applicable).
Select the financial institution at which you and your partner would like to open an account. Go to the financial institution with personal identification and a check or cash to make the initial deposit.
- Add your savings account(s) to the list of accounts for direct deposit of your paycheck.
Determine how much of your paycheck will be allocated to your savings account(s). CU employees can update direct deposit information by visiting the “Payroll and Compensation” section in the employee portal.
- Establish an emergency savings fund.
Allocate a certain amount of your income to emergency savings. The key to growing your emergency savings funds is to start saving now. If the targeted savings amount seems daunting, focus on starting small. It is important to remember that the emphasis in not on saving large sums of money on a regular basis, but rather that you develop the habit of setting aside a manageable percentage of your income on a regular basis.
- Open a savings account dedicated solely to emergency savings (if applicable).
- Open a savings account in your child’s name or help him/her to open one.
- Implement a plan for saving for your child’s college education.
Begin saving in a 529 Plan or Coverdell Education Savings Account. If these plans do not fit your budget or savings goals, develop and implement an alternative plan to set aside money for your child’s education.
- Schedule a 1:1 meeting with a financial professional to discuss your savings goals and questions.
CU employees can schedule a one-on-one consultation with a financial professional by visiting the Employee Services events Web page. View the list of upcoming one-on-one financial consultations and select the campus, date, and vendor that best suit your needs.
- Schedule a 1:1 meeting with a financial professional to discuss your financial and investment questions.
CU employees can schedule a one-on-one consultation with a financial consultant by visiting the Employee Services Events Web page. View the list of upcoming one-on-one financial consultations and select the campus, date, and vendor that best suit your needs.
- Contact the investment plan vendor with which you will roll over funds into an account (if applicable).
If you decide to roll over funds held in plans from previous employers, collect account information for each plan and contact the vendor with which you will be working.
- Enroll in an additional voluntary retirement savings plan or increase your contributions (if applicable).
CU employees can visit /employee-services/retirement-plans for more information.
- Store sensitive financial documents and account information in a safe place.
Store documents in a fire resistance, locked security box at home. You can also consider storing items such as valuable jewelry, property deeds, marriage certificates, birth certificates, foreign currency, stock or bond certificates, collectibles, and family heirlooms in a bank safe-deposit box. It is important to note that cash kept in a safe-deposit box is not insured under the Federal Deposit Insurance Corporation. Thus, if you use a safe-deposit box, be sure to limit its use to storage of valuable possessions and documents. In addition, please note that a power of authority loses authority to act upon your behalf upon your death. Should you die, the only individuals who can access the safe-deposit box are those listed on the signature card for the box rental at the bank. Be sure to keep this in mind should you decide to use a safe-deposit box. In addition, given the limited access to a safe-deposit box, you may wish to store your will at home.
- Implement your decision regarding health insurance coverage.
If adding a dependent to your health insurance, be sure to review the policies, procedures, and deadlines that may apply. For CU benefits-eligible employees currently participating in a CU health plan, visit the Employee Services benefits website for more information on adding a dependent child.
- Update beneficiaries as applicable.
For the 401(a) PlanContact TIAA directly. You can access the TIAA website at www.tiaa.org/cu to manage your account, or you can call a representative at 1-800-842-2252.
For the 403(b) PlanContact TIAA directly. You can access the TIAA website at www.tiaa.org/cu to manage your account, or you can call a representative at 1-800-842-2252.
For the 401k and 457 plans sponsored by the Public Employees' Retirement Association (PERA):Contact PERA.
- Update current coverage for renter's/homeowner's, car and life insurance.
Contact insurance carriers to update coverage.
- Protect your identity.
Be on the lookout for financial scams and protect your identity by regularly reviewing your credit report. Visit www.annualcreditreport.com to request a free report. If you find unauthorized charges on your credit report, contact each credit reporting agency.
The three credit bureaus are:
- Equifax (1-800-525-6285)
- Experian (1-888-397-3742)
- TransUnion (1-800-680-7289)
Inform each agency that you believe that you are a victim of identity theft and ask the agency to put a fraud alert on your file. In addition, request that the credit reporting companies not include the disputed information on your credit report. In addition, create an identity theft affidavit at the Federal Trade Commission (FTC)'s website.
The fraud alert stays active on your credit report for 90 days. If necessary, you can renew the alert after 90 days. In addition to placing the filing the fraud alert, be sure to maintain copies of communication (letters or emails) sent or received regarding the matter. Record dates that you make telephone calls and keep clear, updated records regarding actions taken to resolve the matter.
Upon completion of the FTC identity theft affidavit, file a police report. In turn, you may use these documents to restore your credit by stopping a business from collecting debts that resulted from identity theft and requesting the removal of fraudulent information from your credit report.
- Create an estate plan.
For assistance with estate planning, please view the Estate Planning Checklist.