Financial Planning for Nannies

A New Year, A New Financial Plan

Let's Get Started!

On New Year’s Day we discussed how to spend your holiday bonus. The same priorities apply to your financial plan, whether you received a bonus or not.

First, you should pay off you debts. Once debts are under control create a savings account or emergency fund, and finally start investing for retirement. For those with extra left-over, donating to charities can help you save on your taxes.

Let's get started creating your financial plan:

1. Find Out Your Credit Score:
Get your annual free credit report from Equifax, Experian, and Trans Union. Review the reports to be certain that there are no errors or disputes. That number you always hear about that reflects your creditworthiness, such as 730, is owned by Fair Isaac Corporation, and may be purchased at fico.com. (Stop by again on Tuesday when we will discuss credit card debt in more detail).

2. Review Your Insurance Coverage:
Carefully review your insurance coverage, especially if you have children under 18-years of age. Life insurance, home or apartment coverage, and health insurance are usually the basic insurance policies that live-out nannies need. (If you work as a live-in nanny you ought to be saving a lot since you have no rent or mortgage payments.) If you own expensive items, own a home, or rent an apartment, inventory your personal possessions for insurance purposes. Keep receipts, take pictures or the items, and note features that add to the value. There are many free programs that provide forms to enter your property.

3. Update Information and Store it Safely:
Make a list of all your credit card accounts, insurance policies, any other financial accounts or important documents you have. In the past we would recommend keeping important documents like these in a fire proof safe. But in the modern technological world, since computers can crash and paper can be destroyed it is recommended to save your important information not is known as a "cloud" site. Cloud computing is revolutionizing the computer industry as the perfect solution for all our computer crashing problems. A cloud site is accessed through the Internet, and is used primarily for data storage. We recommend keeping a copy of your important documents on a cloud site such as a Google and Amazon.

Young nannies often overlook having a will. But once you own property or expensive items and definitely when you have dependants you must update your will, your beneficiary designates, and be certain that all your accounts have your current name and address.

4. Know Your Social Security Statement:
Each year you should receive your Social Security Statement which shows you your estimated earned benefits and earnings record from the taxes you pay each year. It’s great to see your retirement benefits, disability fund, and Medicare earnings increase. If you have been working off-the-books, you won’t find hundreds and thousands of dollars for these benefits. Unfortunately, if you don’t pay taxes the evidence will be zero earnings for you.

Finally, do you know how much money you have? How much you owe? What your tax refund will be? How much in taxes will you owe? What you net worth is?

There are numerous programs available at little or no charge to instruct you how to manage you bank accounts, pay your bills, and keep your balance instantly available and invariably correct. These programs are available online from banks, brokers, and tax preparers among others.

Tomorrow: A new budget, a new attitude

Have you stored your data on a "cloud" site? Would you recommend it to other nannies?