Managing your personal finances can be a daunting task, especially if you have multiple accounts, bills, and investments to keep track of. But with the help of automation tools and services, you can simplify the process and save time and money.

In this post, we’ll explore how to automate your personal finances and take control of your money with ease.

The Benefits of Automating Your Personal Finances

By automating your personal finances, you can free up your time, reduce stress, and avoid late fees and penalties.

You can set up automatic bill payments, savings contributions, and investments, so you don’t have to worry about missing deadlines or making mistakes.

Plus, automation can help you stay on top of your spending, track your financial goals, and make informed decisions about your money.

How to Automate Your Personal Finances

There are many ways to automate your personal finances, depending on your needs and preferences. Some popular tools and services include:

1. Online banking: Most banks offer online banking services that allow you to set up automatic bill payments, transfer funds, and monitor your accounts from your computer or mobile device.
2. Budgeting apps: Apps like Mint and YNAB can help you create and stick to a budget by tracking your expenses, categorizing your transactions, and sending alerts when you’re overspending.
3. Robo-advisors: Robo-advisors like Betterment and Wealthfront use algorithms to manage your investments and rebalance your portfolio, so you don’t have to do it manually.
4. Automated savings apps: Apps like Acorns and Digit can help you save money by automatically transferring small amounts from your checking account to a savings or investment account.

Best Practices for Automating Your Personal Finances

While automation can be a great tool for managing your personal finances, it’s important to use it wisely. Here are some best practices to follow:

1. Review your accounts regularly: Even if you’ve set up automatic payments and transfers, it’s still important to review your accounts regularly to ensure that everything is working properly and you’re not missing anything.
2. Set up alerts and notifications: Many automation tools allow you to set up alerts and notifications for things like low balances, unusual transactions, and upcoming bills. Take advantage of these features to stay on top of your finances.
3. Keep track of your spending: While automation can help you stick to a budget, it’s still important to keep track of your spending to identify areas where you can cut back and save more.
4. Be mindful of fees: Some automation tools and services may come with fees, so be sure to read the fine print and understand the costs before you sign up.

Links:

1. https://www.automaticfinances.com/why-automate-your-finances/: This post explains why automation is important for managing your finances and how it can benefit you.
2. https://www.mint.com/: This popular budgeting app can help you track your expenses, create a budget, and set financial goals.
3. https://www.wealthfront.com/: This robo-advisor can help you manage your investments and build a diversified portfolio.
4. https://www.acorns.com/: This automated savings app can help you save money by rounding up your purchases and investing the spare change.

In conclusion, automating your personal finances can be a game-changer for your financial health. By using the right tools and services and following best practices, you can save time, reduce stress, and make smarter decisions about your money. So why not give it a try and see how it can benefit you?

The post Automating Your Personal Finances: How to Save Time and Money appeared first on Automatic Finances.

Most people want to be rich (however you define it).

Many people have thought about what they’d do if they suddenly won the lottery or got a big inheritance or landed their high-paying dream job.

It’d be exciting — for sure. Having plenty of money to save, spend and invest would certainly change your life.

As you can probably guess, however, being rich comes with a cost — one that isn’t always something you can just pay.

In the past, I’ve shared my responses to posts on Quora about money management and investing.

Today, I wanted to share some insights from an Anonymous Quora user when asked: Is getting rich worth it?

Here’s my answer: being rich is better than not being rich, but it’s not nearly as good as you imagine it is.

The answer why is a bit more complicated.

First, one of the only real things being rich gives you is that you don’t have to worry about money as much anymore. There will still be some expenses that you cannot afford (and you will wish you could), but most expenses can be made without thinking about what it costs. This is definitely better, without a doubt.

Being rich does come with some downsides, though. The first thing you are thinking reading that, is, “cry me a river”. That is one of the downsides. You are not allowed to complain about anything, ever. Since most people imagine being rich as nirvana, you are no longer allowed to have any human needs or frustrations in the public eye. Yet, you are still a human being, but most people don’t treat you like one.

There’s the second downside. Most people now want something out of you, and it can be harder to figure out whether someone is being nice to you because they like you, or they are being nice to you because of your money. If you aren’t married yet, good luck trying to figure out (and/or always having self doubt) about whether a partner is into you or your money.

There’s more to this response (which I encourage you to read). I want to highlight what I believe is the core of the answer and the main “consequence” of being rich:

When you have money, it’s no longer about money.

That may sound obvious, but I think it’s an important point to make. You don’t have to worry about paying your bills or saving for college — the fact that you have money allows you to do (almost) anything you want.

In a way, your money almost defines you, which means your personal and professional relationships may not be grounded in basic humanity. This user’s answer is screaming “TREAT ME LIKE A NORMAL PERSON,” which clearly people are not doing.

On the flip side — maybe they are treated like a normal person, but he/she doesn’t know if it’s real or just someone wanting to get access to his/her money.

That’s a sad existence.

Money can certainly help your life, but it can’t solve all your problems.

I think the Quora user explains it nicely to both rich and not-rich folks alike:

Whether you’re rich or not, make your life what you want it to be, and don’t use money as an excuse. Go out there, get involved, be active, pursue your passion, and make a difference.

The post Here’s What It’s Really Like to Be Rich appeared first on Automatic Finances.

For the past 10 years, I’ve been the administrator of the Personal Finance Bloggers group on LinkedIn — a group dedicated to sharing personal finance posts, tips for bloggers, and general financial news.

It’s not something I’ve ever highlighted here — and that’s about to change.

Starting this week, we’ll be sharing some of the highlights from the group here on Automatic Finances.

The topics will range — they’re not always about financial automation — so you’ll get a nice diversity of thoughts and suggestions about managing your money and growing your net worth.

Here are this week’s links.

2019 Student Loan Industry Study
Andrew Latham at Supermoney has an in-depth post about the state of the student loan industry. Here’s a sample:

This comprehensive student loan industry study investigates multiple data sources to reveal the key trends and statistics that define how we finance higher education.

Student loans are the fastest growing source of debt for U.S. households. Since 2007 it has grown three times faster than auto loans and 150 times more than mortgages. Student loans are now the largest source of unsecured debt in the United States and have become a financial industry in their own right. Complete with its own secondary market and student loan asset-backed securities.

Tributes to an investing legend
Robin Powell at Evidence Investor gathers a number of reactions and tributes to the death of John Bogle, a man whose work features heavily here at Automatic Finances.

5 Financial Tips For Those Impacted By The Government Shutdown
Living in Washington, D.C., where the majority of federal employees affected by the government shutdown are, I see and hear about the effects every single day. It’s a precarious situation, so Fenept puts together a short list of tips if you’re dealing with being furloughed or potentially out of work because of the shutdown.

Have an article you want highlighted in our weekly recap?

Post it in the Personal Finance Bloggers group, and be sure to contact us and let us know you’d like it to be featured.

The post Highlights from LinkedIn’s Personal Finance Bloggers appeared first on Automatic Finances.

Paying off your debt is one of the most difficult — and important — pieces of achieving financial freedom.

Until you are completely debt-free, someone else is going to own something that you think is yours.

The number one way to pay off your debt is to automate your payments. Set it, forget it and you’ll be well on your way to being debt-free.

If that’s not an option, you’re setting yourself up for additional problems, including late payments.

If you’re running late making your payments, here’s how to catch up.

List Out All Of Your Payments

The first thing you need to do to avoid late payments is to know when every bill is due.

List everything out. Put it on a calendar. Know exactly how much the payment is and when it’s due.

Don’t let your ignorance of when a payment is due be the reason you get hit with a late fee. (You don’t want a late fee for any reason — especially not because you just didn’t know when it was due.)

When I have non-automated payments, I always immediately add a calendar notification to my Google Calendar for two days before the due date; that way, it bugs me (on my computer and phone) when it’s due, and I have a cushion of a couple days in case there’s some extenuating circumstance (money needs to be transferred, the e-payment system is down, etc.).

Know what you owe, and when you owe it.

Re-Work Your Spending Habits

If you’re finding that you’re ready to pay your bills, but don’t have enough money in your bank account to pay for them, you need to adjust how you spend your money.

There could be some obvious changes; move money into your emergency fund at the end of the month instead of the beginning, or hold off on buying your regular expenses until after you make your payments.

There may need to be some more difficult (but impactful) changes, like cutting back on your expenses, trying to increase your income as much as possible or changing your lifestyle. None of these is necessarily easy — they could, however, make a huge difference in your ability to stay current on your payments.

Consolidate Your Debts

Managing multiple debt payments can be overwhelming — even more so if you can’t make them all on time.

It may make sense for you to consolidate your debts into one or two accounts, where you can have the advantages of installments with only one payment to worry about. Usually, when you consolidate, you can get an initial discount on your interest rate, and hopefully by consolidating, you can lower the interest rates on some of your debts.

Talk to your credit union or a debt consolidation service to see what options are available for you.

The post Running Late on Payments? Here’s How to Catch Up appeared first on Automatic Finances.

At the height of the Great Recession, I received word at my work that everyone in the company would be getting a 10% pay cut.

It wasn’t fun.

Senior management wasn’t happy that they needed to cut everyone’s salaries. Clearly, everyone who worked with me wasn’t happy either (though they were happy to still have a job).

After you deal with the emotions of learning that your pay is being cut, you need to figure out a plan to deal with your new reality.

Here are three steps to handle a pay cut at work.

1. Cut Your Spending Accordingly

The first thing you should do when your pay is cut is to cut back what you spend.

It’s not always easy to downgrade your lifestyle, especially when you’re used to a certain way of living. Cutting your spending, however, is the quickest thing you can do to make sure you stay headed in the right direction.

Determine what’s necessary spending and what’s a luxury, and find ways to cut back your luxury spending (preferably in line with what your salary is cut). If you can continue to save at your pre-cut levels, do that. If you can’t, you may need to cut back your savings as well.

Hopefully, your spending cut backs aren’t long-term — if things go according to plan, then you can go back to your pre-cut spending and saving levels shortly.

If your spending is already cut back to the minimum, you likely have other issues at play to fix first. If you absolutely need to get a short-term loan, do it until you can make up the difference. If you have bad credit, personal loans (not payday loans) may be your best option.

2. Pick Up Additional Work

If your pay cut at work comes with a time cut as well — going from 40 hours per week to 36 hours, for example — you’ve got additional time to go out and make money.

If you’re still working the same hours (and just making less money), you’ll need to be a bit more creative with your time.

Either way, try and find additional work to make up for the pay cut.

It’s easier than ever to find freelance or part-time work. Drive an Uber. Start a business. Pick up a part-time job.  Do what you can to find additional work and make additional money.

You never know — you may actually end up making more than your pay cut, and have a brand new source of income to pull from. That’s a great thing!

3. Look for a New Job

The economy is better than ever. Companies are literally having a hard time finding employees for jobs with salaries above $75,000.

If your salary is cut because your company (or industry) are struggling, you should be looking for a new job immediately.

Finding a new job can often be the most difficult (or at least the most time consuming) part of dealing with a pay cut, so be prepared for it to take some time.

When you have to deal with a pay cut, consider it a three-step process: cut your spending, find additional work, and look for a new job.

Once you’re over the emotional impact of the pay cut, you’re looking at a great opportunity to establish a new path for your career and your finances.

The post 3 Steps to Deal With a Pay Cut at Work appeared first on Automatic Finances.

Managing your money — and working toward a financial goal — is never as easy as it sounds.

Even if you have a guide (like our 17 Days to Financial Freedom), there’s no guarantee that everything will go according to plan.

You could lose your job.

The stock market could crash, right before you’re about to retire.

You could have a life-altering change; moving to a new state for a job, or having a loved one in need of extremely expensive medical help.

Those are the bad things.

There’s also plenty of good things that could happen that throw off your plan: a unexpected financial windfall, a business or job that succeeds beyond your wildest dreams, or a new opportunity that provides you with a larger financial cushion than you ever expected.

When your financial plan needs to change, it’s a great opportunity to step back, re-asses your situation, and adjust.

Here’s how.

Make Sure Your Financial House is in Order

No matter if you’re suffering or succeeding, you need to have a good grasp of what you make, what you owe, and where your money lives.

This is a good chance to re-read Day 1: Organize Your Finances.

Hopefully, most of your finances are organized (since you already did this, right?) and this is more of a mental reset so you know your overall financial picture.

Determine What’s Going Wrong (Or Right)

If your plan has fallen awry because you’re succeeding beyond your initial expectations, apply your same plan of action to your goals more aggressively: pay more on your debt, save more for retirement, and invest more in your business.

For the sake of this post, we’ll assume that things aren’t going according to plan in a bad way — you’re not saving as much as you should be, you’re spending more than you make, or you’re not able to pay off your debts.

Your first step is to recognize the problem.

It’s always tough to admit that you have a problem. It’s even tougher when you’re doing something presumably positive — trying to manage your money better and succeed financially.

You have to recognize the problem. Say it out load. Write it down. Come to grips with it.

Focus On The Problem – and Nothing Else

There’s plenty to do when managing your finances. When you have a problem and need to adjust your financial plan, focus only on fixing that problem — and not worrying about anything else.

If you’re spending more than you make, determine what you can cut. Find ways to make more money. Do anything you can to re-arrange those numbers so that your income is greater than your expenses.

If you’re not able to pay your debts, figure out how to make them more manageable. Consolidate them. Cut your spending and move that money toward debt payments. If necessary, take out a small loan online to cover you while you figure out long-term payments.

If you’re not saving enough, pay yourself first. Consider you the most important bill to pay, and re-work your spending around that.

Once You Have the Problem Under Control, Re-Build Your Plan

Your new financial plan should only be created once you’ve solved (or are on your way to solving) your current issue.

Create a balanced budget – give every penny a purpose. Set your short-term goals. Set your long-term goals. Automate, automate, automate.

Rarely does any plan — let alone a financial plan — go off completely without a hitch. At some point, you’re going to have to change course or, more likely, pause what you’re doing and fix a problem before you can move forward.

You can do it. You just have to make it happen.

The post If Your Financial Plan Isn’t Working, Do This appeared first on Automatic Finances.

Buy low, sell high.

It seems like sound logic, right?

The cheaper you get something and the more expensive you sell something for, the more money you make.

But it doesn’t work in investing quite like that.

The theory does, of course — but not the execution of that theory.

Over on Quora, I was asked a question dealing with just that idea …

Should I save money until a recession hits to invest in a low cost index fund like Vanguard? Assuming I wouldn’t touch my investment for 10+ years.

This question gets two things right …

• it’s worth investing in low-cost index funds, like those from Vanguard
• you shouldn’t invest in the stock market unless you have a long-term outlook

But here’s why I answered an emphatic no to the idea of waiting until a recession hits.

Don’t Wait for a Recession. Here’s Why.

No.

Start investing now.

It doesn’t matter if the economy is good or the economy is bad.

By investing now now in low-cost index funds, you’re investing for the future.

We can’t predict the future, but we do know two things:

1. No one has any concrete knowledge of a particular day/week/month where the stock market is going to be down enough that it’s “hit bottom” and you should buy.
2. Over the course of its existence, the US stock market has continued to grow and provide wealth to Americans investing in the economy.

Think about this.

On September 16, 2008, I tweeted this:

That day, the stock market closed at 11,059.02.

The economy was falling apart.

People were losing jobs left and right (I lost mine in early 2009).

No one knew if we were at rock bottom (we weren’t).

I had people reach out to me and say it was a bad idea to encourage investing in the stock market at that point.

Really. They said that things were really bad … why invest in the economy?

I was buying; you see, I’m an automatic investor. I don’t time the market — I buy automatically on pre-determined dates with pre-determined amounts of money.

Two months later, the stock market was down to 7,552.29.

I continued to buy. Because I don’t time the market.

On March 6, 2009, the market hit its bottom at 6,443.27.

I continued to buy. Because I don’t time the market.

Today, the Dow Jones Industrial average is over 24,000.

And guess whose investments have been growing this whole time?

That’s right.

Now look …

I know you may read this and say, “Well, obviously I should wait until the economy crashes to buy … that’s what you just gloated about!”

No. That’s not the point.

The point is that through good times (now) and bad times (then), investing in the economy has always been a good, long-term decision to make.

I invested before the stock market crash (when it was in the 14,000s), when it was crashing, and at the bottom.

All of those purchases I made have grown exponentially today because, in the long-term, the economy continues to grow.

That’s why you shouldn’t wait to invest.

Just do it.

Photo by Aron Visuals on Unsplash

The post Here’s Why You Don’t Wait for a Recession to Start Investing appeared first on Automatic Finances.

No one gets rich from credit card rewards.

We always recommend spending with a debit card (I literally just wrote about this), but I understand the appeal in using a credit card to get rewards … if you pay it off each month.

Unfortunately, it doesn’t look like most people are.

In fact, nearly 40% of people who use rewards credit cards carry a balance on them … essentially exchanging debt for these rewards. That’s according to a survey from CompareCards.com.

Here are some of the major findings from their research, which surveyed 1,051 Americans who have one or more rewards credit cards.

• 39% of rewards cardholders carry a balance, with an average balance of $2,547
• 32% said the top thing they planned to use their credit card rewards for was to pay down debt
• 26% said they have 3 or more rewards credit cards

But wait — here’s the crazy thing.

Tracking Credit Card Rewards vs. Checking Accounts

More than 20% of those surveyed said that they keep better tabs on their rewards miles than the amount in their checking account.

This is dumb. Credit card rewards are not worth it.

CompareCards.com, which presumably is in the business of promoting credit card usage, even thinks this is dumb. Here’s what they say about carrying the average balance of $2,547:

Even presuming that they have cards with a relatively low APR of 15.9%, that still amounts to $378 in interest payments every year. That’s the equivalent of 37,800 miles’ worth of rewards, assuming 100 miles have a redemption value of $1. Earning 37,800 miles would require a significant amount of spending — $18,900 on a card that earns two miles per dollar — and if you’re already carrying a balance, $18,900 of purchases throughout the year will likely add to that. In short, using rewards to retire debt is a losing proposition at these levels. And according to our survey, the most common use of rewards is, ironically, to retire debt.

Credit card companies want you to think that the rewards are a good enough reason to use their products … and you’ll inevitably spend more and likely carry a balance.

It’s not just their assumptions; it’s real science. And they win every time.

Photo by niu niu on Unsplash

The post Don’t Go Into Debt For Credit Card Rewards. Seriously. appeared first on Automatic Finances.

Reasonable people can have a reasonable dialogue about whether or not credit cards have value.

We’ve preached that using a debit card is the best way to spend, but fair arguments can be made that if you pay off your balance every month with the right card, you can accrue extra benefits for your normal spending.

The psychology of how you spend shows that paying with a credit card leads to more expensive and unhealthier purchases than with cash, and some would argue that credit card companies have been screwing customers for decades.

So when I saw this question on Quora — and the ensuing answers — I had to jump in.

Why do rich people use credit cards when they can afford to pay expensive things at once?

I was amazed at a number of the answers, so here’s my take.

Do Rich People Use Credit Cards?

Wow.

Just wow.

I read through all the answers to this question, and I can’t believe they’re all so wrong.

What do we have so far from the answers?

• Benefits (Justin Franco)
• Rewards (Margaret Weiss)
• Credit Scores (Denver Bright)
• They “want more” (guy I can’t tag because he only has a first name)

Etc.

Did anyone actually read the question?

Here’s what what was asked:

Why do rich people use credit cards when they can afford to pay expensive things at once?

Am I the only one who sees the issue here?

There’s an inherent assumption with the question that no one has attempted to address.

Ready for this?

Here we go. Get rid to have your mind blown.

Rich people don’t use credit cards.

What? Of course they do, man. What are you talking about?

Look, obviously there’s some high net worth people who use credit cards. I’m not going to deny that.

No One Became Rich Thanks to Credit Cards

But the reality is that people who are rich become rich because they don’t use credit cards.

No one ever became rich because they could put off payments for 30 days, and no one ever stayed rich from rewards points.

There’s a great book you should read. It’s called The Millionaire Next Door.

Here’s a great description of it from the amazing personal finance blog Get Rich Slowly:

Written in 1996 by marketing professors William Danko and Thomas Stanley, its main premise is that people who look rich may not actually be rich; they overspend — often on symbols of wealth — but actually have modest portfolios and, sometimes, big debts. On the other hand, actual millionaires tend to live in middle-income neighborhoods, drive economical cars, wear simple watches, and buy suits off the rack.

Think about it.

• Is someone who spends a lot of money rich?
• Are you rich if you drive a flashy car?
• Is that person who’s constantly posting pictures from their vacations on your Facebook feed rich?

No. Not at all.

It simply means that they either spend a lot of money, or have a lot of debt they need to pay.

Read this whole post from GRS to understand the findings of the book, and then go read it yourself.

So what exactly makes a person rich?

Here’s one of the 3 ways the rich manage their money better than you:

Your salary is only as good as your ability to continue to work. As we’ve seen with athletes with million-dollar-a-year salaries, you can’t count on money to always be pouring in.

The real rich focus on growing their net worth.

Buying a BMW isn’t going to make you rich. Owning a million dollar home isn’t going to make you rich. Not spending all of your income each month will make you rich.

By keeping more of the money you make, the longer you’ll have it to keep you rich.

Dude, why are you so opposed to credit cards?

Honestly, I’m not really.

I get the idea of racking up frequent flier miles and consistently paying off your balance each month. I understand why that’s attractive to people.

But I also know that spending with credit cards affects you psychologically.

Yup, it does. Here’s what research has shown:

1. Paying with a credit cards is less painful than paying with cash. So shoppers spend more money.
2. Credit card users not only spend more, but they also purchase more unhealthy things.
3. Those who pay with cash enjoy a better relationship with their purchased products.

People who are rich are rich because they keep more of their own money.

They focus on growing their net worth; not their rewards points.

Rich people don’t care about credit cards because credit cards don’t make — or keep — you rich.

Photo by Ryan Born on Unsplash

The post Why Do Rich People Use Credit Cards? appeared first on Automatic Finances.

Having a baby is one of the biggest life-changing situations you can experience.

It’s no longer just about you — it’s about this new person you’re bringing home from the hospital to be a part of your family.

With the additional responsibilities are, of course, additional costs. It’s not cheap to raise children — everything from food to clothing to shelter to the expenses of life add up.

If you’re in a position to help save for your new child’s future, then get started right away.

Over on Quora, a user wanted to know how …

Which is better investment for your newborn?

If you forgive the odd grammar, it’s a great question. Here’s how.

What’s the Best Investment for a Newborn Baby?

I’m assuming a few things about your situation …

1. You’re American, or can invest in the US
2. There’s not a specific goal (college, retirement, etc) you have in mind for the money
3. Tax savings would be nice, but not required

Here’s what I would do.

First off, I am not your advisor. So consider this answer knowing that.

Second off, you should consider exactly what your goal is before you do anything.

Right now, it seems like you’ve got a generic goal — start investing for my newborn in a fund that won’t be touched for 30 years — but that’s not specific enough.

OK, now that that’s out of the way.

You’ll want to open a custodial account; essentially, an investing account that you control but is for the benefit of someone else.

For a 30-year time frame, your best bet is to buy index funds. These are mutual funds that track indexes (like the S&P 500 or the Dow Jones Industrial Average).

Why index funds? Here’s what Warren Buffett — easily the brightest mind in investing ever — has to say:

Buffett says an index fund is a way to avoid the risk of picking individual stocks.

“The trick is not to pick the right company, the trick is to essentially buy all the big companies through the S&P 500 and to do it consistently and to do it in a very, very low cost way,” he added.

Buffett points to the fee savings built into low-cost index funds. The largest such S&P 500 fund, Vanguard’s 500 Index Fund, boasts expense ratios of less than a percentage point.

You know what else is great about index funds?

They have low fees.

They’re not actively managed, so you’re not paying anyone to make decisions about which stocks to buy and which to sell. It all gets done automatically.

As Buffett (again) says, fees are the silent killer that eat away at your investments.

“Just remember, the person you’re talking to, your fees are their income,” the billionaire said.

“And it leaves your pocket and goes to them and you’d better get something for it. And you really don’t get it in investment management,” he said. “The record shows that the unmanaged index fund is going to do quite well over time and active investment as a group can’t beat it.”

(By the way, here’s some secrets fund managers don’t want you to know.)

Asset allocation matters.

Again, I don’t know exactly what you’re planning to use the money for or if it will all be taken out once the 30 years are up, so consult with a financial advisor to get specifics.

But if you’re expecting to be able to regularly withdraw money from the account after the 30 years, then your asset allocation is important.

Early on — when your baby is born — you’ll want to invest more in stock funds and less in bond funds. As it gets closer to the 30 years, you’ll want to invest gradually less in stock funds and more in bond funds.

That way, you’re less likely to get a huge drop-off in your savings if we go into a recession or market downtime when you’re ready to pull money out.

Taxes matter.

Be aware that your fund will likely be subject to the “Kiddie Tax“.

The Kiddie Tax is applied to the amount of your child’s unearned income that exceeds $2,100. The Kiddie Tax rate is your marginal tax rate (the highest rate applied to the last dollar you earned) which could be as high as 39.6%.

For example, if your 13-year old daughter had $3,000 in unearned income last year, $900 of that would be subject to the Kiddie Tax. In the highest tax bracket, the Kiddie Tax on that amount would be $356.

Congratulations (I assume) on the newborn, and great job thinking about how you can save for them.

Photo by Liane Metzler on Unsplash

The post How Should I Invest for a Newborn? appeared first on Automatic Finances.