New Families – Balancing Family Life Quality with Longer-Term Goals

Karen and Michael were referred to us after sharing their need for financial expertise. The couple has two young daughters and recently upsized their home. They were renting the first home but wanted to sell and invest the proceeds. Karen has a secure corporate job and Michael is a successful freelance writer. They had significant savings, in part to compensate for Michael’s irregular income. They felt they were behind on retirement and saving for their girls’ educations.

After reviewing income, expenses and objectives we crafted a comfortable plan to help them reach their goals:

  • We agreed that there was more than needed in savings to cover the Michael’s unpredictable income and that they could direct some discretionary income to periodic investments.
  • After selling the first house and allowing for some taxes, we increased Karen’s retirement contributions to the deductible maximum (currently $18,500). We also explored paying down car loans and Roth IRA’s.
  • They established a high yield online savings account and automatic drafts for mortgage, car loans & investments. Employers generally allow you to split direct deposit to at least two different accounts.
  • We recommended 529 accounts for the girls with initial investments and monthly contributions. While these accounts grow tax-deferred, distributions for education, including private K-12 tuition are tax-free! In Georgia, the Path2College plan offers state tax deductions of the first $4,000 per child, per year.

Karen’s employer benefits offer great health and disability plans, but the life insurance is expensive. Term insurance is the best way to replace anticipated income and if you’re healthy, individual policies are usually significantly cheaper than from employer plans. We compare coverage from almost all major carriers and guide clients through the application and approval process.


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