My Own Life Insurance Journey

Like many, I bought my first life insurance policy in my 20s—mostly because I knew it was the “responsible” thing to do.

When our son was born, my needs changed dramatically. Suddenly, we had childcare costs, a growing list of family expenses, and his future education to plan for. I added more coverage.

Later, when our daughter arrived, I was already in my 40s—and by then, we had also taken on a bigger mortgage. For many families, that timing might feel “late in life” to be adding coverage. But with the right strategy, it doesn’t have to be overwhelming. I built a laddered approach—adding policies with different lengths and different amounts—to match our obligations. Because coverage phases out as those obligations (like tuition and the mortgage) go away, the overall cost stays manageable, even starting later.

This laddered strategy saved about 15–20% on premiums compared to buying one big 30-year policy, while giving me the most protection during the years my family needs it most.

Are You Over- or Under-Insured?

The most important step is to ask: Does your coverage still fit your life today?

• Over-insured? If your mortgage is nearly gone, your kids are financially independent, and retirement savings are solid, you might be paying for more insurance than you need. Many people also forget they have life insurance through work—coverage they’ve never factored into the bigger picture. If you’re considering canceling, read: Three Considerations If You Are Thinking to Cancel Your Life Insurance Policy.
• Under-insured? If you still have tuition to cover, debts to pay, or parents who rely on you financially, your current coverage may fall short. Ask yourself: Do You Have Enough Life Insurance?.

Term Insurance: Still Worth Considering

If you bought a 20- or 30-year term policy years ago, it may be close to expiring. When the term ends, so does the coverage. If your responsibilities are still significant, this could be the time to add more. Even in your 40s or 50s, shorter-term coverage—like a 5- or 10-year term—can still be surprisingly affordable.

And don’t assume term is just for your younger years. Sometimes adding new coverage later makes perfect sense if your financial needs have grown. Not sure how much protection you need right now? Start here: Calculating the Need for Life Insurance.

Permanent Insurance: Does It Still Fit?

Permanent insurance (whole life, universal life) is usually set up with long-term goals—estate planning, leaving a legacy, or lifelong protection. For some families, these policies remain useful well into retirement. Others may find that their original purpose no longer applies.

Permanent policies can also provide flexibility. Over time, they build cash value, which can sometimes be accessed through policy loans—for example, to help cover a child’s college costs. But it’s important to remember: tapping that cash value comes at a cost, reduces the death benefit, and should always be carefully evaluated. For more perspective, read: Is Whole Life Insurance an Investment?.

Review as Life Changes

Your financial life won’t stay the same—and neither should your insurance. I’ve adjusted my coverage as our family grew and our mortgage changed, and I encourage others to do the same. Make a point to review your policies every few years or whenever you hit a major milestone.

The right coverage gives you peace of mind that your family is protected. And making sure it evolves alongside your life is one of the smartest financial moves you can make.

Further Reading on Life Insurance

• Three Considerations If You Are Thinking to Cancel Your Life Insurance Policy
• Is Whole Life Insurance an Investment?
• Do You Have Enough Life Insurance?
• Calculating the Need for Life Insurance

The post Life Insurance and the Sandwich Generation: Do You Have the Right Coverage? appeared first on MainStreet Financial Planning.

To avoid potential taxes and penalties with a 529 plan rollover to a Roth IRA make sure to understand the requirements.

• Account age: The 529 plan must have been open for at least 15 years.
• Rollover amount: The rollover amount must be from contributions made to the 529 account at least five years prior to the transfer date.
• Annual contribution limit: The rollover amount cannot exceed the annual Roth IRA contribution limit for the year. For 2024, the annual Roth IRA contribution limit is $7,000, or $8,000 for individuals aged 50 and older (based on age of the beneficiary).
• Lifetime rollover limit: The total amount that can be rolled over from a 529 plan to a Roth IRA over a beneficiary’s lifetime is $35,000.
• Direct transfer: The rollover must be a direct trustee-to-trustee transfer.
• Beneficiary name: The Roth IRA must be established in the name of the 529 account’s designated beneficiary.
• Earned income:  The beneficiary needs to have earned income equal to at least the rollover amount.
• Not all states recognize this new rule so you may owe state taxes and penalties.  Read more

As you wrap up the year, perhaps you want to explore taking advantage of this new rule.  You have until the tax filing deadline April 15, 2025, to complete the 529-to-Roth IRA rollover for the 2024 tax year.

Also, remember to consider your other options for unused/leftover 529 plan funds:

• Change the beneficiary of the 529 plan to another qualifying family member and use it for qualified education expenses.
• Create an education legacy for grandchildren.
• Save it for graduate school, professional programs, pursuit of a different field of study, resuming college later.
• If the beneficiary has special needs, you can rollover the 529 plan into an ABLE account which has a much broader definition of qualified expenses.
• Use up to the $10,000 lifetime limit to pay student loans.
• If the 529 plan beneficiary gets a scholarship, you can withdraw up to the scholarship amount penalty-free.

529 plans are a great education savings vehicle.  Your contributions can grow tax-free and if you use the money for qualified education expenses there are no taxes on distributions. College is a big expense, and the best strategy is to have savings to meet your family’s goal of paying for college.  So have no fear…save to a 529 plan and if things do not work out as planned…you have options for your unused

The post Year-end Planning: Unused/Leftover funds in a 529 Plan appeared first on MainStreet Financial Planning.

If you are in the SAVE repayment plan, your loan is now in forbearance indefinitely.  That means no loan payments are due until this issue is resolved, which could take a while.  You also will not be charged any interest on your loan while it is in forbearance.

The important difference with the SAVE forbearance relative to the previous pandemic forbearance is that you will not earn Public Student Loan Forgiveness (PSLF) or Income Dependent Repayment (IDR) forgiveness credits.  This could ultimately lead to forgiveness taking longer than you planned.  Click here to access the U.S. Department of Education’s updates.

With SAVE repayments paused what should you be doing?

• Login to your student loan account and make sure that you are not accruing interest on your loan, loan servicers can make mistakes.
• Use this opportunity to shore up your emergency fund, save toward a goal or pay down high interest credit card debt by redirecting your monthly loan payment.
• Don’t let the money that would otherwise go toward monthly student loan payments get spent elsewhere in your budget, then when loan payments resume, you will have to make difficult adjustments.
• If you are in the PSLF close to the 120 monthly payment milestone, you may decide to change your repayment plan to avoid delaying forgiveness. Carefully weigh the pros and cons of making a change.
• It is possible that the SAVE repayment plan will end. Explore the other repayment plans so you know what to expect and can start planning for your future!

It has been an interesting few years for student loan borrowers with repayment stopping and re-starting.  In addition, the uncertainty of loan forgiveness may be making planning for the future difficult.  On the bright side of things…you have a wonderful opportunity to get ahead on your other financial goals right now!  If you want to take full advantage of this opportunity but don’t know where to begin, give us a call and we would be happy to help!

The post SAVE Plan Blocked…Student Loan Repayment Uncertainty Continues appeared first on MainStreet Financial Planning.

What is a Custodial Roth IRA?
A Custodial Roth IRA allows a parent to open and manage a Roth IRA for a minor. The account is owned by the child, but the parent or guardian manages it until the child reaches the age of majority, typically 18 or 21, depending on the state. This account type is particularly beneficial for children who have earned income but may not have the knowledge or ability to manage their retirement savings yet.

Earned Income Requirement:
To contribute to a Custodial Roth IRA, your child must have earned income. This can come from traditional W-2 income sources, such as an after-school or summer job, or from self-employment, like babysitting or freelance work. The income must be verifiable, as this is a key requirement for opening and contributing to the account. There is no age requirement for opening a custodial Roth IRA so long as the child has earned income.

TIP: While there is an earned income requirement there is also an effective strategy where the parent can “gift” the child the full or partial amount of the contribution. This approach allows the child to enjoy their earnings while still contributing to their Roth IRA. For instance, if your child earns $3,000 from a babysitting job, you as the parent could contribute $3,000 on their behalf since they had $3000 in earned income and still allow the child to keep the earnings for them to use/spend. You could also consider contributing half of the earned income they had for the year ($1500) and then the child contributing the other $1500 while still allowing them to keep some of their hard earned money to spend while still making the child have some “skin in the game” so to speak.

Contribution Limits:
The contribution limit for a Custodial Roth IRA is the lesser of your child’s earned income or $7,000 per year (as of 2024). For example, if your child earns $5,000 in a year, that is the maximum amount they can contribute for that tax year. If they earn $8,000, they would still be limited to the $7,000 cap.

Time Advantage:
Starting a Custodial Roth IRA for your child maximizes the time their investments have to grow through compound interest. While any individual can open a Roth IRA at age 18, opening one even earlier enhances the time value of money and helps establish a habit of regular contributions. This early start not only amplifies the growth potential of their savings but also ingrains the discipline of consistent investing.

Withdrawal Rules:
The same rules that apply to a regular Roth IRA apply here. Contributions can be withdrawn at any time without penalty. However, withdrawing earnings before age 59½ may incur taxes and a 10% penalty, with certain exceptions such as first-time home purchases or education expenses. Importantly, the 5-year clock for tax-free withdrawals starts when the account is opened. This means that starting early allows the clock to start ticking sooner, making it possible to access funds for major life events like buying a house or paying for education with fewer penalties.

Long-Term Growth Potential:
Consistent contributions to a Custodial Roth IRA can result in substantial long-term growth. For example, if your child contributes $6,000 annually starting at age 10, they could potentially see their account grow to over a million dollars by retirement, thanks to the power of compound interest. Starting early not only increases the account’s value but also teaches the child the importance of regular saving and investing.

By opening a Custodial Roth IRA, you provide your child with a powerful financial tool and teach them the value of long-term planning. This early exposure to saving and investing sets the stage for a secure and prosperous adulthood.

*Source T Rowe Price 

A Custodial Roth IRA can be opened at most brokerage firms online—Vanguard, Fidelity, Schwab, etc. If you have questions about how to open and invest in a Custodial Roth IRA for your child, reach out to us, and we’d be happy to help guide you in setting your child up for success.

The post What is a Custodial Roth IRA and Should I Open One for my Child? appeared first on MainStreet Financial Planning.

One of my favorite quotes from the book is

“Allowance is not an entitlement or a salary. It is a tool for teaching children how to manage money.”

For children aged 5 to 8, Godfrey emphasizes the importance of learning ten basic money skills, such as how to save, track money, talk about money, spend wisely, and use money to do good in the world.

Here is what I am adapting and implementing with my son Liam.

Start Early: Basic Money Concepts

Even young children can grasp basic money concepts. It’s crucial to start early with simple, tangible methods that make the idea of money relatable. One effective way is using a piggy bank for collecting spare change. This allows children to see the physical accumulation of money, reinforcing the idea that saving can lead to something bigger.

What I am doing:

1. Tooth Fairy Money: My son Liam, now 5 and a half, has lost three teeth this year. Each time, the Tooth Fairy leaves a little money, which he adds to his piggy bank.
2. Cash Register Play: Liam loves playing store with his various toy cash registers. This game helps him understand the concept of transactions and the exchange of money for goods.
3. Kids Wallets: Liam has several kids’ wallets that come with fake dollars, coins, plastic cards, and IDs. He takes them everywhere, which helps him get used to handling money and understanding its value.

Establishing Habits: Saving and Investing

Introduce saving habits early. When your child receives money, whether from allowances or gifts, encourage them to save a portion of it. This can be done through their piggy bank or a small savings account.

What I am doing:

3 Savings Jars: We use three jars labeled Save, Spend, and Give. This method helps Liam understand the different purposes money can have and the importance of saving a portion of his money for future needs. Liam has a smaller set of plastic Jars. This looks like it could hold a lot more.

Discussing Values: Family Views on Money

Talking about your family’s values regarding money is crucial. Explain how your family decides to spend, save, and donate. This helps children understand the purpose behind financial decisions.

What I am doing:

 We still need to establish this more formally with Liam. Yuri and I intuitively know our values, but we haven’t discussed them directly with him. We often talk about saving money for vacations and trips, emphasizing that we save to explore the world, meet new people, make friends, and learn new things. This helps Liam appreciate the value of saving for experiences.

Using Games: Fun with Money

Make learning about money fun through games. Playing store or board games that involve money can teach children about spending and saving in a playful context.

What I am doing:

1. Kids Monopoly Game: Liam loves playing the kids’ version of Monopoly, which teaches him about money management in a fun way.
2. Playing Store: Using his cash register and other store-related toys, we play Target store at home.
3. Lemonade Stand: We’ve set up a lemonade stand in our neighborhood, giving Liam a hands-on experience with earning and handling money. As we made a few dollars, I am looking to invest in something that has more visibility, like this stand.

Involving Them: Family Meetings

Include your kids in simple family meetings about budgeting and spending. This gives them a sense of responsibility and inclusion in financial decisions.

What I am doing:

We’re just starting with this. We talk about simple things like grocery shopping and discuss prices for items, helping Liam understand numbers and value. This practice will become more frequent as he gets older.

Setting Goals: Saving for Special Occasions

Help your child set savings goals for birthdays and holidays. Use a chart or an app to track their progress. This teaches them the value of delayed gratification.

What I am doing:

We use the phrase “Put it on your wish list” a lot and have started a list on my phone for Liam. This helps him understand that we don’t buy things on a whim but save for bigger events like birthdays or holidays. He keeps asking me to review with him what is on the list from time to time.

Allowance: Learning Through Chores

Introduce an allowance system tied to chores. This teaches children the concept of earning money. Discuss how they can use their allowance, emphasizing the difference between spending and saving.

What I am doing:

Liam is starting kindergarten next month, and we’ve decided this is the right time to introduce an allowance. We’re starting with $5 per week, allowing him to decide how to use it. He has three jars for saving, spending, and giving. We’ve been discussing the purpose of each category, using his Tooth Fairy money as a starting point.

Teaching children about money from a young age is an invaluable investment in their future. By incorporating simple activities and discussions, we can help them develop a strong foundation in financial literacy. As Joline Godfrey points out in Raising Financially Fit Kids, these early lessons can shape their financial habits and attitudes for life. Remember, the goal is not just to teach them how to manage money but to instill in them the confidence and knowledge to make smart financial decisions.

As I test out these strategies and tools, I’ll be sharing my own experiences as things unfold. With the right guidance and tools, like the strategies from Godfrey’s book, we can ensure our children grow up to be financially savvy adults!

The post Early Financial Education: Teaching Kids Money Skills from Ages 5-8 appeared first on MainStreet Financial Planning.

BOOKS FOR PARENTS

Ron Lieber’s book, The Opposite of Spoiled– offers a practical guide for parents to address children’s awareness and questions about money, covering essential financial topics and instilling virtues like modesty and generosity to raise financially wise and grounded young adults

Raising Financially Fit Kids by Joline Godfrey – This combination of parenting and personal finance books equips parents to teach their children essential money skills like saving, budgeting, and investing, through age-appropriate stages and activities.

BOOKS FOR CHILDREN

AGE: 4-7
Anthony C. Delauney created a series of books teaching children practical financial lessons. Here a few to start with:

• Michael and Hannah and the Magic Money Tree
• Lilly & May Learn Why Mom & Dad Go to Work

Larry the Bunny Saves His Money by Jim DeGaetano Jr.  – This has been one of Anna’s son Liam’s favorite books. It not only helps children learn how to count but also introduces basic concepts of spending, saving, paying taxes, and enjoying their money.

AGE 8-13
Money Skills for Kids by Fern Browne – Packed with practical advice, real-life examples, and interactive activities, this book makes understanding money fun and engaging for kids aged 8 to 13, guiding them to become savvy savers and wise spenders.

AGE 13 -18

Money Skills for Teens: These Are The Things About Money Management and Personal Finance You Must Know But They Didn’t Teach You in School by Emily Carter – A comprehensive guide to help your teen achieve financial mastery, covering everything from earning and saving to investing and budgeting.

ARTICLES WRITTEN BY THE MAINSTREET TEAM

1. Four Things I Want My Daughter to Know by High School Graduation
2. Money Habits to Teach Children
3. Money Tips for Young Adults
4. Becoming a Financial Grown-Up

PODCAST BY ANNA SERGUNINA, CFP®

Anna has curated a private playlist called “Kids & Coins” featuring her top episodes on a variety of financial topics for children. The collection covers everything from setting up the “Three Jars” (Save, Give, Spend) and deciding on allowances, choosing the best savings and investment accounts, and recommending books and other resources for teaching kids about money.

The post Back-to-School Money Skills- Essential Guidance for Parents and Children appeared first on MainStreet Financial Planning.

Financial education has always been a cornerstone of my career. While I don’t claim to be an expert on teaching kids about finances, I’d love to share some of the techniques I have used with my daughter over the years.

She learned the basics of credit by borrowing from the “Bank of Mom” and repaying on time. She practiced counting her money, keeping it safe, shopping at a makeshift store we set up in the living room, and saving for things she wanted. She made a few mistakes along the way, but I was there to guide her and help her learn from them.

As Joline Godfrey states in her book, Raising Financially Fit Kids, “Allowance is not an entitlement or a salary. It is a tool for teaching children how to manage money.” She also emphasizes that there is no right amount to give; the key is to start small and increase the allowance as the child’s ability to manage responsibility grows.

When my daughter turned 13, we opened checking and savings accounts at our local credit union. Although I am the joint owner, the account is in her name, and she has full control over it. She has a Visa debit card and has been managing her accounts successfully, earning interest on her savings. She thoughtfully transfers money from her savings to her checking account as needed.

According to my current research, typical allowance rates range from $1 to $2 for each year of a child’s age. My daughter receives $20 every two weeks, and I also cover her share of the iCloud storage bill. Seeing how well she manages this, I’m considering increasing her allowance to help her learn to budget for school clothes, supplies, and other expenses.

I’m incredibly proud of her understanding of saving and comparison shopping. She saved over $400 in seven months from Christmas and birthday gifts, babysitting, cat sitting, doing odd jobs, and her allowance. She even sold her Amazon gift cards to friends and family to convert the value to cash, which she deposited into her account. With her savings, she bought a used cell phone after thorough research and comparison shopping.

My daughter is passionate about horseback riding and dreams of owning a horse someday. This summer, she conducted a research project on the costs associated with owning a horse, including purchase and maintenance expenses. This exercise was eye-opening for her, and while she still aspires to own a horse, she now understands the financial commitment required.

Over the next four years, I aim to teach her additional financial skills, such as:

• Using credit wisely
• Planning a vacation
• Understanding salaries for different jobs and careers
• Exploring college costs and funding options
• Investing and understanding dividends and interest
• Appreciating the time value of money
• Negotiating pay and how to get paid what you are worth
• Living on a budget
• Evaluating the costs of buying and owning a car

And much more

I hope this blog post inspires you to think about ways to educate your teenager about personal finances.  Here are some helpful resources I’ve found:

Financial Literacy books

• Raising Financially Fit Kids by Joline Godfrey
• I Will Teach You to Be Rich by Ramit Sethi
• The Opposite of Spoiled by Ron Lieber

Financial Literacy Programs

• Junior Achievement
• FDIC Money Smart for Young People
• Schwab Moneywise America
• NY Public Library Books Resources

Explore Other MainStreet posts

• Money Habits to teach your children
• Four Things I Want My Daughter To Know by High School Graduation
• Money Tips for Young Adults
• Becoming a Financial Grown Up
• Early Financial Education: Teaching Kids Money Skills from Ages 5-8

As Joline Godfrey says, “Financial literacy is not about the money but launching great kids!”

The post Raising a Financially Literate Teenager appeared first on MainStreet Financial Planning.

The post College Planning with Help from Grandparents! appeared first on MainStreet Financial Planning.

1. Plan Early

Planning early is essential for any wedding, but it’s especially important for a destination wedding. Notify your family and friends as soon as possible so they can arrange time off work, update passports, and book travel. Whether you’re getting married within the US at the beach or in the mountains or somewhere outside of the US, like Mexico or Italy, give yourself at least a year to fully plan your destination wedding.

2. Get Some Help

Using a specialist or company that focuses on destination weddings can save you time and stress. They act as a hybrid of a wedding planner and travel agent. My sister’s planning company helped secure the wedding date, coordinate a block of hotel rooms for guests at a group discount, and manage transportation from the airport to the hotel. They also handle any travel or room changes needed, making the process smoother.

3. Choose Off-Season Dates

Opt for an off-season date to save on costs. My sister and her fiancé are getting married at the end of October, which is off-season in Mexico. This choice resulted in lower costs for flights, accommodations, and the wedding venue itself. Off-season weddings can significantly cut expenses while still providing a beautiful setting.

4. Know the Rules

Be aware of any extra fees for bringing your own vendors. If you prefer a specific photographer or officiant over those offered by the resort, there may be additional charges for “outside vendors.” To simplify budgeting and reduce costs, many hotels offer all-inclusive packages that cover the ceremony, reception, food, and drinks.

5. Use Travel Rewards

Leverage travel rewards and cash-back incentives to save money. This can be especially beneficial for a destination wedding, potentially saving you thousands on travel expenses. Use points for flights and accommodations to reduce overall costs.

I have the unique insight of helping my sister plan her wedding, and I’ve seen both the successes and challenges of planning a destination wedding. I hope these tips help you save money if you or a friend or family member decides to plan a destination wedding.

Other resources:

Budgeting for wedding season

Tips to save money on travel

The post 5 Money Saving Tips for a Destination Wedding appeared first on MainStreet Financial Planning.

At MainStreet Financial Planning, every member of our dedicated team is proudly affiliated with the Garrett Planning Network (GPN). This affiliation goes beyond a mere association; it signifies a commitment to providing exceptional service and embracing a unique model of financial planning. Our approach aligns with the five defining characteristics upheld by the Garrett Planning Network that set us apart in the realm of financial planning.

Here is what makes us different:

1. Hourly, Fee-Only Service:

We operate on an hourly or, flat, fee-only basis, ensuring transparency and alignment of interests with our clients. Importantly, we do not accept sales commissions or any compensation beyond what is directly agreed upon with our clients. Clients pay only for the time your advisor actively works with you.

2. No Minimums, Maximum Accessibility:

Unlike traditional financial advisors, being a Garrett Advisor means that we have no income or investment account minimums for hourly engagements. This eliminates barriers, making our services accessible to individuals across different income brackets.

3. No Product Sales, Pure Expertise:

This is probably the most distinctive part of being a Garrett Planning Network advisor. We, as Garrett Advisors, distinguish ourselves by not selling financial products. Instead, we offer our time and expertise to guide clients through their financial journey. This commitment to objectivity ensures that the advice provided is solely focused on the client’s best interests.

4. Tailored Recommendations:

While not selling products, we do offer specific recommendations and opinions on various products and services that may be suitable for a client’s situation. Additionally, we can guide clients on where to obtain these products or services. If requested, we can also assist with plan implementation so whether it is rebalancing your employer’s 401(k) or giving a recommendation for how to invest your ongoing IRA or brokerage account contributions so that they align with your risk tolerance and time horizon, we can help regardless of whether they are held at Schwab, Vanguard, Fidelity, Betterment, etc.

5. Accessible Financial Guidance for All:

This is my favorite quality of being a Garrett Planning Network advisor – with fees structured as flat or on an hourly basis, MainStreet provides accessible options for individuals at every stage of their financial journey. Whether you’re a beginner with a quick question, a middle-income earner seeking ongoing financial assessment, or a do-it-yourself enthusiast in need of direction, Garrett Advisors cater to diverse financial needs. Our team has a wealth (pun intended) of knowledge ranging from:

• Debt payoff plans
• Experience with government employees, including both military and civilian
• Evaluating equity compensation
• Helping small business owners
• Working with individuals who are widowed or divorced.
• Planning for college
• Taking a gap year
• Relocating to another state or country
• Retirement income planning
• And so much more

In embracing the Garrett Planning Network model, clients gain not just financial advice, but a partnership built on trust, transparency, and a commitment to their financial well-being. If you’re intrigued by this innovative approach to financial planning, feel free to reach out with any questions. I say this with the most humility one can communicate in a brief article that our entire team at MainStreet loves what we do, and we are here to guide you every step of the way.

The post Unlocking Accessible Financial Advice The Garrett Planning Network Advantage appeared first on MainStreet Financial Planning.