As a dad of twin boys and a teenage son, I can attest there is never enough time in the world. There is never enough time to spend with your spouse, kids, job, anything. Definitely, not enough time to properly focus on your financial future. Here is where I see many younger families go wrong with their finances that I don’t want it to happen to you.

1. They are not up to date with tax law changes.

• The IRS just released that you can now contribute up to $6,000 annually in an IRA and $19,000 in a 401K beginning in 2019. Adjust your monthly contribution to take advantage of this change.
• The child tax CREDIT now applies for higher earners and also just doubled to $2,000 per child.
• 529 plans have expanded so that you can use them to pay for private elementary, high school, and college qualified expenses. A 529 education plan can be for you, even if you do not have kids.

2. They do not properly protect their family in case of a tragedy.

• Extremely important: Have you named guardianship for your kids? If not, do you really want a judge to choose who will raise them?
• Life insurance: You should at minimum have enough to cover all debt and five years of replacement income for your family. Many other factors to consider here, as well.
• Should you name your minor children as a beneficiary to investments? If not, a trust?

3. They don’t properly allocate paying bills & saving for retirement/education.

• There may be tax incentives for you to save for retirement and 529 plans (especially in your state).
• At any time, you may withdraw contributions from your Roth IRA both tax- and penalty-free. If you withdraw only the amount of your Roth contributions, the distribution is not considered taxable income and is not subject to penalty, regardless of your age or how long it has been in the account. (You can use the contributions if needed for retirement, kid’s education, etc..)
• Many stay-at-home parents work extremely hard, but do not generate a paycheck. This DOES NOT mean that they cannot have their own retirement plan and contribute to it. This is why they implemented the “spousal contribution” for IRAs.
• The interest you pay on loans that were once tax deductible may not be any more with the new tax plan. Does this affect you?

4. They incorrectly take from retirement accounts causing irreparable damage.

• There are special circumstances in Traditional IRAs, such as health care costs exceeding 10% of income, being a first time home buyer (up to $10k), or secondary education costs that can get around that nasty 10% penalty when dealing with IRAs.
• You can do an “indirect rollover”, where you take money out of your IRA. You have 60 days to pay it back to avoid penalty or taxes. This is a once a year option, as doing twice in a 365 day period can trigger taxes and the penalty.
• Remember, Roth IRAs can always have the principal distributed without taxes and penalties.

5. They do not invest for the next 50 years.

• To achieve tax free growth and distributions, consider maxing out your Roth IRA. You will thank me in retirement.
• Factoring inflation, $1,000,000 in thirty years could equate to about $400,000 today. Saving the million should be the bare minimum, especially if you want to avoid ramen noodles in retirement.
• Invest in companies that you believe in. When you are ready to invest in stocks, think about where you buy things, how you pay for them, and where they are located.
• How many different advisors do you want to work with? If your advisor is “older”, do you want to start over when that advisor retires (and probably sells your account to another advisor)?

If interested in hearing more ways to better set up your financial future, visit….

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing. Non-qualified withdrawals may result in federal income tax and a 10% federal tax penalty on earnings. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.