Money Musings: 4 Tools People with Dependents Need to Know About

Money Musings 💭 4 tools people with dependents need to know about


This reflection is geared towards those who have people depending on them financially, but these tools can also be very beneficial for those without so I still recommend you read this regardless!

Financial planning is complicated enough when we’re planning for ourselves. By adding people depending on you, the expenses get higher (sometimes much higher) and the complexity goes up. It can more easily feel overwhelming.

As J and I have become parents, there are four standout tools that have been the most helpful in helping us make these larger expenses work and generally make our money go farther.

Depending on your goals, these may be some game-changing tools to consider:

  • HSA (Health Savings Account) / FSA (Flexible Spending Account). More people = more medical bills. But these accounts are also hugely beneficial for those who are financial planning solo. The gist? Tax-free money for medical expenses (that can also grow tax-free as investments). You can get the full rundown here.

  • Dependent Care FSA. Like a medical FSA except you’re using pre-tax money for a certain amount of your dependent care expenses. This can include care for an elder dependent or childcare / tuition for a child. If you are going to be spending this money anyway, you might as well max this out.

  • 529 Plan. A tax-advantaged investing account (that functions a lot like a 401(k)) that you can use for qualified education expenses. Yep, it’s not just for college anymore. The money grows tax-free and depending on where you live and your income, you may get a small tax write-off in the year you contribute, too.

  • Don’t forget about sinking funds. The more people you have in the mix, the more often large, irregular expenses may come up. Set up a sinking fund or two to smooth out expenses. You can learn how here. Sinking funds are particularly helpful for paying for travel, holidays, tuition, camp, birthdays and family care expenses.


Have you used any of these financial tools? I would love to hear about your experience or which you’re excited to learn more about!

MONEY MOVE OF THE WEEK

FIGURE OUT HOW MUCH YOU NEED IN YOUR RAINY DAY FUND.

I heard from many of you in 2020 and 2021 that you either regretted not having or were motivated to start an emergency savings (or rainy day) fund. Most Americans couldn’t cover an unexpected $400 expense without borrowing money or selling something. So, if you don’t have a rainy day fund yet, you are not alone. Today is a perfect day to get started.

A rainy day fund provides us security in the event of an emergency but also gives us the freedom to make choices and take risks (aka leave the job you hate, move out of a bad living situation, etc). A great goal is to have 3 months of living expenses in your rainy day fund but if that feels daunting, start with $1,000.
After you’ve calculated this amount, set up a weekly or bi-weekly automatic transfer ($5 is a great place to start if $$ is tight) to a separate savings account. I walk you through in more detail here. It only takes a few minutes to set this up - and it is WELL worth it for your peace of mind.

YOU GOTTA SEE THIS

YEAR IN REVIEW.

At the Fiscal Femme we’re feeling very grateful for our incredible community as we wrap up 2021 and are hopeful for a MUCH LESS challenging year for all in 2022.

Here are some of the biz highlights for the year:


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