Planning

Top 8 financial to-dos for new parents Learn key financial steps to safeguard your newborn's future with expert advice and planning tips.The moment we knew we had a newborn on the way, my wife and I dived into all the standard parenting research. Car seats. Strollers. Baby-led weaning. It can be overwhelming. As a CFP®, I also know that planning our baby’s future goes beyond diapers and late-night feedings. From creating a solid financial foundation to navigating the complexities of insurance and estate planning, financial decisions can seem daunting. But with a little planning—and some practical tips— you can confidently pave the way for this exciting journey. So here they are, my top 8 financial to-dos for new parents: Get life insurance: A good rule of thumb is to have life insurance equal to 10x your gross salary. I generally recommend term insurance over permanent insurance. Update/Create an estate plan: This should include a will, power of attorney, updated beneficiaries, medical directive, and possibly a trust. Start saving for college: If you start when your child is born, investing approximately $500/month should be able to fund the cost of an average public university. Freeze your newborn’s credit score: This can help prevent identity theft of your newborn. You’ll want to do this for each of the three main credit bureaus, Equifax, Experian, and TransUnion. Update your health insurance: Make sure to add your newborn to your health insurance. Some parents may also wish to change to a plan with a lower deductible to help minimize risk. Research tax benefits: A quick scroll on Instagram will reveal tips for structuring your finances to accrue tax benefits with kids. You’ll want to look into some of these, among others: the Child Tax Credit and Child and Dependent Care Credit. Update your budget: A newborn baby can be a shock to your finances. Here are some common expenses to consider when updating your budget: Childcare: The average cost of daycare is $332/week. The average cost of a full-time nanny is $870/week. So it’s a good idea to call child care centers in your area to get a sense of what you’ll need—and how far out to reserve your spot. Daily newborn items: Diapers, wipes, formulas, bottles, clothes, toys, medicine, books—the list goes on. Healthcare: Depending on your health insurance, you’ll likely be paying more each paycheck. Rent or mortgage: Maybe you need more space, or are considering a renovation—or even a move to be closer to family. Discretionary spending: You may need to temporarily cut back on things like shopping, vacation, and dining out (probably not a problem with a newborn anyway) to make room for your newborn expenses. Increase your emergency fund: Once you’ve updated your budget and have a handle on your monthly expenses, you will likely need to top up your emergency fund in order to still cover three to six months of expenses. There’s a lot to consider when preparing for your newborn and their short-term and long-term needs. And of course, each family is different. What type of school your kiddos attend, when you start saving, and where you live will all play a role in the decisions you make. But, as with saving for most things: Starting early can help you set your family up with a firm financial foundation that grows with your evolving needs.

How to talk money with your aging parents Practical ways to wade into a conversation most families avoid. Key takeaways Start the money conversation with your parents before a crisis forces it—proactive talks reduce stress for everyone involved. Lead with empathy and curiosity, not solutions; building trust matters more than covering every financial detail in the first conversation. Use a natural icebreaker (a news headline, a personal example) to ease into the topic without feeling like an interrogation. Expect some awkwardness, and don't let it stop you—the goal is opening the door, not finishing the conversation in one sitting. Talking money with your parents is no one’s idea of a good time. But as you enter middle age, and they enter their golden years, it’s important to create an open dialogue. Because one day, you could be pressed into duty helping them manage their finances, or even stepping in with financial support yourself. So before you buy another bouquet of flowers, or another tacky tie, consider gifting your parents a meaningful conversation on money’s role in aging gracefully. Here's how. Step into their shoes, then switch mindsets If you think it's hard having this “talk” with your parents, imagine how they must feel. Maybe they're afraid their money won't last. Maybe they're too embarrassed to ask for help. From anyone, let alone from someone whose diaper they once changed (and changed, and changed). This sort of empathy sets the stage for a true heart-to-heart. Sure, you could share any number of practical tips—everything from catch-up contributions and safe withdrawal strategies to (quick plug) how awesome Betterment is and how easy it is to switch—but those conversations are best left for another day. What matters most in these first few exchanges is to build trust, and to come at things through the lens of curiosity, not problem-solving. To that end, we leave you with a few suggestions. Three ways to set the table, and three icebreaker ideas Depending on your relationship with your parents, there may be no way around this: It will be awkward. Your inquiries may be met with resistance. So start getting comfortable with both possibilities. A few tips can help your odds: Pick a boring time. Steer clear of hectic holidays. Start small. Spread things out over multiple conversations. Stay curious. The questions matter more than the answers. Now, once it’s time to actually start the conversation, consider a few icebreakers: The “23andMe” angle. “I’m curious, how did your parents handle their finances as they aged? Did you ever talk about it with them?” The “I’ll go first” angle. “With the kids getting older, I’ve been thinking more and more about estate planning lately. But it’s all so overwhelming.” The CNBC angle. “Did you see the Dow just dropped [insert number] points? I know it’s easy to overreact, but it stings seeing my portfolio shrink even just a little.” Regardless of where things go from here, remember to give yourself credit. You just took the hardest step (the first one) in joining your parents on their financial journey. And if there ever does come a day when they consider joining you at Betterment, our team is here to help.

The keys to building wealth, whether you rent or buy There's more than one path to prosperity. Key takeaways Soaring home prices and elevated interest rates have shifted the rent vs. buy calculus. You can still build wealth while renting—if you put the savings to work. To come up with an actionable plan, crunch a few numbers, then automate your savings to keep lifestyle creep from siphoning off your cash flow. To rent or to buy. It’s a question that eats away at renters, one monthly check at a time. And while it’s often framed in terms of the financials, it's also a deeply personal decision about how you want to live right now. The lifestyle side of it—how long you plan to stay in a city, whether a backyard matters more than a short commute—that part is yours to figure out. But the financial side? That's exactly where we can help. Is renting or buying your primary residence the smarter money move? Here's something the rent-vs-buy debate often gets wrong: it treats homeownership as the default path to wealth and renting as being stuck in a holding pattern at best. But with home affordability in a decades-long rut, and prices skyrocketing since the pandemic, that narrative is being questioned like never before. The truth is both renting and owning a home can generate meaningful wealth over the long run. The outcome depends less on which option you choose and more on what you do with your money along the way. For homeowners, that means living in your home long enough to build equity and recoup the substantial upfront and ongoing costs of buying and maintaining a property. That breakeven point now borders on a decade for people buying in today’s market. For renters, it means investing the money you're not sinking into your home rather than letting it quietly disappear into lifestyle spending. How to put the "renting + investing" strategy into practice As shown in the chart above, the median U.S. home currently sells for a shade over $400k. But here's what it actually costs to buy and own it—both upfront and on an ongoing basis. Up-front expenses Amount Down payment (20%) $80,640 Closing costs (6%) $19,354 Total $99,994 Ongoing expenses Mortgage (6.53% rate) $2,047 Property tax $504 Homeowners insurance $215 Maintenance $504 Total $3,270/mo All assumptions per NerdWallet’s Rent vs Buy calculator unless otherwise linked The numbers are worth sitting with for a moment. Not because they should discourage you, but because your gut reaction to them is useful information. If saving more than $100,000 in liquid cash feels out of reach right now, the timing may not be right. And if now isn't the time to buy, that's completely okay. The rent-vs-buy calculus shifts at different stages of life, and many people land on different answers at 28 than they do at 38. What matters most if you're renting is treating the gap between what you're spending now and what homeownership would cost as an investable sum. Crunch the upfront and ongoing numbers above based on your own situation, then follow two steps to see the strategy through to the end: Start saving for those upfront costs now, preferably in a high-yield cash account or conservative investing allocation. Once that goal is reached, consider setting up a recurring deposit that invests the difference in costs between renting and owning. Now it’s no longer a hypothetical. You’re putting those savings to work. Should you decide to buy down the road, you’ll be more financially ready—and the tradeoff will be clear: Buy a house. Or keep saving at your current levels. Either one can help you build wealth if you stay the course.

Debt doesn't have to keep you caged—here's how to save your way out Paying down debt and building your savings aren't mutually exclusive—here's a simple framework for juggling both at once. Key takeaways Getting your financial footing early in your career has never been easy, but today’s high-debt, low-hire job economy adds to the struggles. But you don't need to be debt-free before you start saving. They can run on parallel tracks. Some debt can sit on the backburner while you put your money to work elsewhere. It all hinges on how high of an interest rate a loan carries. Quick number crunching beats a high-maintenance budget. Size up your cash flow, then direct your discretionary spending with a few guiding principles. Between college, cars, and credit cards, debt is a simple fact of life for a lot of us, especially those early in their careers. But waiting until you’re debt-free to start saving means missing out on one of your biggest advantages as a saver: time. So let’s reset expectations. With a clearer picture of your cash flow, you can chip away at debt, find your financial footing, and start enjoying some meaningful financial freedoms all at the same time First: Figure out what you're working with Do you really need a budget? We’d say yes, but it doesn’t need to be a detailed spreadsheet or elaborate app. Crunch a few numbers, then get on with it. Because before you can decide where your money goes, you need to know how much you have to direct in the first place. Start with your take-home pay, what lands in your account after taxes. Then subtract bare necessities like: Housing — your total costs will vary depending on whether you rent or own Utilities — electricity, internet, phone, etc. Transportation — car payment, insurance, gas, or transit Groceries — actual at-home food spending, not delivery Health insurance — assuming you're not on a parent's plan What's left is your discretionary income. For a lot of people in their 20s, that number is smaller than they'd like. That's okay. Even a little is enough to get started. From there, split what's left into two buckets: Freedom fund — for saving, debt paydown, and building toward bigger goals (more on this below) Fun fund — for shame-free spending like going out, trips, whatever makes your life feel like your life If you have a decent chunk of discretionary spending to work with, a 50/50 split between these two buckets is a solid starting point. If things are tight, lean toward the freedom fund for now. This is your money's first real job—not just covering expenses, but starting to build something. Then: Build your freedom fund Financial freedom comes in many shapes and sizes, but the most impactful aren't always the most exciting. So when setting up your freedom fund, it’s often best to focus first on preventing backsliding. 1. Cover your minimum payments and capture any employer match Missing minimum debt payments can lead to late fees, credit score dings, and balances that quickly balloon—small problems that become expensive ones quickly. If your employer offers a 401(k) match, contribute enough to get it. That match is treated as part of your total compensation. Leaving it on the table is like giving yourself a pay cut. 2. Attack high-interest debt while building a starter emergency fund Not all debts are created equal. Those with higher interest rates—roughly 8% or higher based on the current rate environment and market forecasts—can snowball fast. So paying them down aggressively is often the higher-ROI move. Lower-interest debt, on the other hand, is less of an emergency. You don't need to pour every available dollar into paying it off. Steady, on-time payments can be enough while you work toward other goals. At the same time, consider building a small cash cushion as you go. Without one, a single surprise bill can send you right back to square one. Even $500 in a high-yield cash account makes a meaningful difference. Cash Reserve offered by Betterment LLC and requires a Betterment Securities brokerage account. Betterment is not a bank. FDIC insurance provided by Program Banks, subject to certain conditions. Learn more. 3. Start designing the life you want This is where the line between your freedom and fun funds starts to blur. You’ve laid the foundation with the previous two steps, now you can dream big with moves that make sense a few years out or beyond. Sometimes that’s a literal move—to your own place, or a new city—or stepping away from work for a while for your mental wellbeing. Eventually, it can mean working less for the money, and more for the meaning. Because as your nest egg grows, you may very well feel empowered to pass on jobs that don’t align with your values. Either way, these types of long-term goals are better-suited for low-cost, globally-diversified investing, and apps like Betterment make it easier than ever to get started. A good-enough system beats the perfect plan When you’re just starting out, you’re often working with less than you’d like. But you can still build momentum by starting small and staying consistent. You don't need to have it all figured out. You just need a clear enough picture of your cash flow and a few sensible priorities to work from. Cover your minimums. Build a small cushion. And put what's left to work. The rest will follow.

How to course correct when you simply can't stay the course De-risking during market volatility can be costly. Here’s how to do it without breaking the bank. The best course of action during market volatility is often inaction. That’s because selling riskier assets at a loss locks in those losses. It foregoes their potential for future growth, and it might also trigger capital gains taxes in the process. But if taking some sort of action feels necessary, then modestly reducing your overall risk exposure can be a reasonable alternative. Consider dialing down your existing stock allocation by a few percentage points, or lower the costs of recalibrating by using your future deposits instead. Either way, the solution may be the same: sprinkling in more bonds. Consider bonds to calm your investing nerves When people talk about diversification, equities like international stocks get most of the attention. But no less important in the role of managing risk are bonds. These are the loans given to governments and companies by investors, and while they're not completely risk-free (no asset is), the relatively-modest interest they tend to pay out can feel like a windfall when stock values are plunging. They won’t negate all of the volatility of stocks, but they can help smooth things out and preserve capital. This is why all of our recommended allocations include holding at least some bonds. You can easily dial the bond allocation up or down in our portfolios such as Core. And we also offer two portfolios comprised primarily of bonds, each one designed for a different use case: Target Income built with BlackRock, designed to help you limit market volatility, preserve wealth, and generate income. The Goldman Sachs Tax-Smart Bonds portfolio, designed for high-income individuals seeking a higher after-tax yield compared to a cash account. Don’t forget about the role of cash One of the best ways to mitigate your overall financial risk is by shoring up your emergency fund, which may include a high-yield cash account like our Cash Reserve. Imagine losing your income stream, and how much time you'd want to get back on your feet. A good place to start is 3-6 months' worth of your essential expenses, but your right amount is whatever helps you sleep more soundly at night. Cash Reserve offered by Betterment LLC and requires a Betterment Securities brokerage account. Betterment is not a bank. FDIC insurance provided by Program Banks, subject to certain conditions. Learn more. Steadying the ship during unsteady times As we mentioned up front, right-sizing your risk during downturns isn’t always cheap. But there are ways to minimize the costs. Lowering your risk profile incrementally is one of them, and stretching out your safety net is another. Either way, it’s okay to recalibrate your risk tolerance from time-to-time, and you can do it wisely with Betterment.

Free financial advice, for the busiest season of your life For households with $100k+ at Betterment, our advisory fee includes complimentary live chat with a licensed financial specialist. Key takeaways Mid-career comes with competing financial priorities, but you don't have to figure out the order alone. Households with $100k or more at Betterment unlock free access to live chat with a licensed financial specialist. Not AI, not a bot—a real person. Higher earners often leave money behind by staying in "default mode.” Use live chat to size up advanced strategies like asset location, backdoor Roth IRAs, and tax-loss harvesting. Transferring investments from outside Betterment can be a simple way to reach $100k and unlock live chat, while also bringing more of your financial life under one roof. If life is one long series of challenges, those in their 30s or 40s are somewhere in the messy middle of it all. Maybe you just bought a house, or you're trying to. Maybe there's a kid on the way, an expensive wedding behind you, and a college fund somewhere on the horizon. Your income is real now, your finances are getting complicated fast, and the old advice ("just max out your IRA") stopped covering it a while ago. The good news? You don't have to untangle everything by yourself. Households with $100k or more at Betterment now have free access to live chat with a licensed financial specialist—someone who can look at your specific situation and help you figure out what to do next. So let's set the table for your first conversation. Too many goals, not enough dollars? You’ve got a lot going on, so much that your cash flow can’t cover everything. Free live chat can help you quickly prioritize and start knocking out money goals. Because the sooner you start, the sooner you can start enjoying the financial freedom that comes with stacking milestones. Here’s a sampling of the life goals we can help you sort through: Buying a home. Whether you're ready to make an offer or still saving for a down payment, a home purchase reshapes your whole financial picture. A $100k Betterment balance not only lets you size up your strategy with the help of a specialist, it can score you a discounted rate on a mortgage. Building (or rebuilding) an emergency fund. Life has a way of getting expensive at the worst moments. Three to six months of accessible cash is the foundation everything else sits on. At the same time, it’s also possible to overdo it. So size up exactly how much cash you need to sleep better at night, and what to do with the rest. Saving for your kid's college. This one isn’t a pass-fail proposition. Saving even a little, especially while your kids are little, can lighten their financial load when college or trade school come knocking. The question is where to save, and how this goal fits against everything else you're juggling. Charitable giving. The great thing about building the foundation for long-term wealth is it empowers you to give with an abundance mindset. And by donating and replacing appreciated shares instead of dollars, you can effectively reset the tax bill on a slice of your taxable investing as an added bonus. Move beyond the basics of investing Once your finances mature a little, you hit a different category of question. Not "Am I saving?" but "Am I set up the right way?" This is where a lot of investors quietly wonder if they're missing something. And often, they are—not because they've done anything wrong, but because default settings don't always age well. A few advanced settings worth exploring include: Asset location (aka Tax Coordination). It's not just what you invest in, it's where you hold it. You may now have a mix of account types (tax-deferred, tax-exempt, and/or taxable), and strategically dividing up your portfolio between them can meaningfully reduce the potential tax drag on your returns over time. Backdoor Roth contributions. Make more money, and the tax benefits of a traditional IRA will quickly phase out. Make a little more, and the same goes for Roth IRAs. But there’s a perfectly legit workaround that high earners use to get money into a Roth anyway. It takes a couple of steps, so live chatting with our team (and a tax advisor) is highly recommended. Tax-loss harvesting. When your taxable investments dip below their initial purchase price, you can jump on the opportunity to “harvest” the theoretical loss and potentially snag similar benefits as tax-deferred accounts. None of these are hacks. They're just what a well-kept portfolio and automated investing can look like once you've moved past the basics. Help has entered the chat If your household has more than $100k at Betterment, you've reached the point where some money questions are worth asking out loud—and you can do exactly that, for free, with a licensed financial specialist via live chat. Not a chatbot. Not an FAQ page. A real human who can act as a sounding board, take a look at how you're set up, and tell you honestly whether anything deserves a second look. Think of it as a gut-check from someone who's seen a lot of portfolios. The kind of conversation where you can ask: Is a backdoor Roth right for me? How can I grow my charitable giving right along with my wealth? Does my particular mix of assets and accounts make sense? If you're already at $100k, you're already in—simply open a new support chat and select “Talk to a financial specialist.” And if you're not quite there, transferring existing investments from external accounts can be a straightforward way to get there. It can mean bringing more of your financial life under one roof, with the fuller picture in view. So consider transferring your investments to Betterment, and get a second set of eyes for your nest egg.