Parents

Houston Parents - Prepare Financially, Plan & Budget for the Future 

There is no love greater than a parent's love for their child, and, with that, also comes no greater worry than the thoughts of "Am I doing everything I can to protect and provide for my children...". Financial worry can lead to stress and can cause you to be less present than you want to be for your kids. With some planning, preparation, and discipline, some financial worries can be eased.

Are you planning to begin your family or are you preparing for your baby to head off to college in just a few short years? No matter where you are in parenting, Texas Bay is here as your financial partner through all of your little one's milestones. Follow along with Texas Bay Credit Union to learn more.

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Purchasing a Family Home

Planning to purchase a family home involves careful consideration of various financial factors. Here are some steps to help you financially plan for buying a family home:

• Determine Affordability: Calculate how much house you can afford by considering your household income, existing debts, monthly expenses, and savings. Use our online calculator to estimate a comfortable home purchase price and monthly mortgage payment.
• Save for a Down Payment: Start saving for a down payment on your future home. Most lenders require a down payment of at least 20% of the home's purchase price to avoid private mortgage insurance (PMI). However, Texas Bay offers First Time Buyers programs, with up to 100% financing. You’ll still have closing fees, but won’t be required to provide a down payment.
• Improve Your Credit Score: A higher credit score can help you qualify for better mortgage rates and terms. Check your credit report for errors and work on improving your credit score by paying bills on time, reducing debt, and avoiding new credit inquiries. Read Understanding Credit Scores.
• Research Mortgage Options: Explore different mortgage options, such as conventional fixed rate, FHA, and VA loans. Compare interest rates, terms, and requirements to find the best mortgage option for your financial situation. Read more about the various types of mortgages HERE.
• Factor in Additional Costs: In addition to the down payment and mortgage payment, consider other costs associated with buying a home, such as closing costs, property taxes, homeowner’s insurance, HOA fees (if applicable), maintenance, and repairs.
• Get Pre-Approved for a Mortgage: Get pre-approved for a mortgage before house hunting to demonstrate your seriousness to sellers and real estate agents. Pre-approval will also help you understand how much you can borrow and narrow down your home search within your budget.
• Shop for a Home: Work with a real estate agent to find a suitable family home that meets your needs and budget. Consider factors such as location, school districts, neighborhood amenities, size, layout, and future growth potential.
• Negotiate the Purchase Price: Negotiate with the seller to secure the best possible purchase price for the home. Consider factors such as market conditions, comparable home prices, and any needed repairs or updates.
• Plan for Homeownership Costs: Prepare for ongoing homeownership costs, including utilities, maintenance, repairs, and upgrades. Create a home maintenance budget and set aside funds for unexpected expenses.
• Review Long-Term Financial Goals: Consider how homeownership fits into your long-term financial goals, such as retirement savings, college savings for children, and other investments. Ensure that purchasing a home aligns with your overall financial plan.

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Paying for College/Vocational School Expenses

There are several ways to pay for college, some of which Texas Bay can help with:

• Coverdell Education Savings Accounts: Start saving when they’re small! Open a Coverdell account with Texas Bay, deposit a little each month, and you’ll be surprised at how much you’ll have when the time comes.
• Scholarships: Scholarships are merit-based or need-based awards that do not need to be repaid. They are typically awarded based on academic achievement, extracurricular involvement, talents, or other criteria. Texas Bay gives 5 scholarships away each year!
• Grants: Grants are financial aid awards based on financial need and do not require repayment. They are typically awarded by the federal government, state governments, colleges, and private organizations.
• Work-Study Programs: Federal work-study programs provide part-time employment opportunities for students with financial need. Students work on-campus or off-campus jobs to earn money to help pay for educational expenses. Work-study earnings are typically used to cover tuition, fees, and living expenses.
• Federal Student Loans: Federal student loans are loans offered by the U.S. Department of Education to help students and their families cover the cost of college. Federal student loans offer fixed interest rates and flexible repayment options, including income-driven repayment plans and loan forgiveness programs.
• Parent PLUS Loans: Parent PLUS Loans are federal loans available to parents of dependent undergraduate students. These loans allow parents to borrow money to help pay for their child's education. Parent PLUS Loans have fixed interest rates and flexible repayment options.
• Private Student Loans: Private student loans are loans offered by private lenders, like Texas Bay Credit Union. They are not guaranteed by a government entity but by your credit.
• 529 Savings Plans: 529 savings plans are tax-advantaged investment accounts designed to help families save for future education expenses. Contributions to 529 plans grow tax-free, and withdrawals used for qualified education expenses, including tuition, fees, room and board, and books, are also tax-free.
• Educational Tax Credits and Deductions: The federal government offers tax credits and deductions to help offset the cost of higher education. The most common tax credits for college expenses are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC).
• Home Equity Loan or Line of Credit: If you have equity in your house, let it pay for these expenses. Texas Bay Credit Union offers competitive rates and low fees. It’s a great way to pay for your kids' college or vocational school.

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Transportation – For You and Them

Transportation plays a crucial role in fulfilling various responsibilities and meeting the needs of your family, whether you’re driving or your teen is taking on their own getting around. Between trips to school, extracurricular activities, or their first job, reliable transportation for you and them is important. Finding and financing a car can be a chore, but Texas Bay makes it easy! We offer a one-stop-shopping and financing experience – all from the comfort of your home.

• Find Your Car Online: With our vehicle buying service, you can take a virtual test drive, get crash and maintenance reports, and more. So, go find that new ride and go to the next step seamlessly.
• Auto Loan: We have many different loan options, some with low ratees, others help keep monthly payments low, and for qualified buyers, you can enjoy no payments for 90 days.
• First-Time Auto Buyer Loan: Especially for first-time drivers, we offer a first-time buyer program. This will help your teen build credit (read more below).

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Changing Insurance Needs

As your parental life changes, so do your insurance needs. It's essential for parents to regularly review their insurance coverage with a trusted advisor, like Texas Bay Insurance Group, to ensure that their policies adequately protect their family and assets throughout life's changes.

• Birth or Adoption of a Child: When a child enters the picture, parents may need to increase their life insurance coverage to ensure financial security for their dependents if something were to happen to them.
• Home Purchase: Buying a home often requires homeowners’ insurance, and parents may also want to consider additional coverage for valuable possessions or liability protection.
• New Vehicles: Purchasing a new car may require updating auto insurance policies or considering additional coverage options, such as umbrella insurance, especially if the family's financial situation has changed.
• College Planning: As children grow older and approach college age, parents may need to consider insurance options for tuition protection or liability coverage if the child attends college away from home.
• Estate Planning: As assets grow, parents may need to consider additional life insurance or explore options like trusts to protect their estate and provide for their children's future.
• Retirement Planning: As parents approach retirement age, they may need to reassess their life insurance needs and consider options for long-term care insurance or annuities to support their retirement income.
• Children Leaving the Nest: When children become financially independent and leave home, parents may be able to adjust their insurance coverage, such as reducing life insurance coverage or changing auto insurance policies if the children are no longer driving the family vehicles.

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Preparing for Baby

Preparing financially for a baby is a significant step, but with proper planning, you can ensure a smooth transition into parenthood. Here are some tips to help you prepare financially for the arrival of your baby:

• Create a Budget: Start by creating a comprehensive budget that outlines your income, expenses, and savings goals. Factor in anticipated baby-related expenses such as diapers, formula, clothing, childcare, and medical costs.
• Estimate Costs: Research the costs associated with pregnancy, childbirth, and raising a child in your area. Consider expenses such as prenatal care, hospital bills, baby gear, and ongoing childcare expenses.
• Review Insurance Coverage: Review your health insurance policy to understand what prenatal and maternity care services are covered. Consider adding your baby to your health insurance plan once they're born. Also, look into life insurance policies to ensure your family is financially protected in case of unexpected events.
• Start a Baby Fund: Set up a separate savings account or baby fund to cover anticipated expenses related to the baby's arrival and first few years of life. Contribute to this fund regularly to build up a financial cushion.
• Create a Will and Estate Plan: Establish or update your will and estate plan to ensure your assets are protected and your child is provided for in the event of your untimely death. Consider appointing guardians for your child and setting up a trust fund for their future.
• Adjust Your Budget: Once your baby arrives, adjust your budget to accommodate new expenses and changes in your financial situation. Be prepared for unexpected costs and be flexible in your financial planning.

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Tips for Teaching Financial Literacy

Teaching financial literacy to children is a valuable skill that can set them up for a lifetime of financial success. Here are some tips for teaching financial literacy to young children:

• Start Early: Introduce basic financial concepts to children at an early age. Even preschool-aged children can begin learning about money through simple activities and discussions.
• Use Everyday Examples: Use every day experiences as teaching opportunities. For example, involve children in grocery shopping and explain concepts like budgeting, comparison shopping, and the value of money as they help choose items. Start with the basics of money, such as identifying coins and bills, understanding their values, and learning how to count money. Use play money or real coins and bills for hands-on learning.
• Introduce Saving: Teach children the importance of saving money for future goals. Set up a savings account at Texas Bay and teach them to set aside some of their chore money or allowance to take to the credit union for deposit.
• Set Goals: Help children set realistic financial goals, such as saving for a toy or a special outing. Break down larger goals into smaller, manageable steps and celebrate their progress along the way.
• Teach Delayed Gratification: Help children understand the concept of delayed gratification by explaining that they may need to wait and save money before making a desired purchase. Teach children to differentiate between needs and wants and help them prioritize spending accordingly.
• Explore Earning Money: Introduce the concept of earning money through chores or other age-appropriate tasks. Assigning chores and paying children for their work can teach them the value of hard work and earning income.
• Encourage Giving: Teach children about the importance of giving back by encouraging them to donate a portion of their money or time to charitable causes. Help them understand the impact of their contributions on others.
• Be Patient and Consistent: Be patient and consistent in teaching financial literacy concepts to children. Reinforce lessons regularly and answer their questions in an age-appropriate manner.
• Learn and Earn on the Go: If your child has a smartphone, download the Zogo Financial Literacy app. It’s free and they can earn and learn!
• Online Calculators: For the older kids, have them check out and play with our online calculators such as budgeting, saving, and benefits of spending less, or even have them play with the Save a Million!
• Financial Literacy from Texas Bay Credit Union: We have an active blog with great financial education and tips offered. Check it out!
• For the Student in Your Life: Check out our Student page!

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Help Your Teen Build Good Credit

Building good credit is an important financial skill for teenagers as they transition into adulthood. Here are some steps parents can take to help their teens build good credit:

• Educate Them About Credit: Start by explaining the basics of credit, including what it is, how it works, and why it's important. Help them understand how credit scores are calculated and the factors that influence their score.
• Introduce Them to Credit Building Tools: Help your teen explore credit-building tools designed for young adults, such as a Texas Bay secured credit card. These cards typically have lower credit limits and are easier to qualify for, making them a good option for building credit responsibly.
• Monitor Their Credit Report: Encourage your teen to regularly monitor their credit report to check for errors or signs of identity theft. You can request a free copy of their credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year through annualcreditrport.com.
• Teach Them to Use Credit Wisely: Emphasize the importance of using credit wisely and avoiding common pitfalls, such as carrying high balances or maxing out credit cards. Encourage them to only charge what they can afford to pay off each month and to keep their credit utilization ratio low.
• First Auto Loan: Is it time for them to drive? Let them buy their first car with a First Time Auto Buyer loan from Texas Bay! This is a great way to help your teen learn to build their credit score at the same time.
• Heading to College: Have them take out a small, starter personal loan with Texas Bay to pay for some of the fun things they’ll need for their dorm room or apartment. With regular monthly payments made on time, this is another great way to earn a good credit score.

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Lead by Example

Leading by example is one of the most effective ways to teach children about financial responsibility and set them on the path to financial success. Here are some ways parents can lead by example:

• Practice Responsible Spending: Show your children how to make wise spending decisions by prioritizing needs over wants and avoiding impulse purchases. Explain the importance of budgeting and sticking to a spending plan.
• Be Transparent About Finances: Involve your children in discussions about household finances, such as budgeting, saving, and paying bills. Be transparent about your financial goals, challenges, and strategies for managing money.
• Set Savings Goals: Set savings goals as a family and work together to achieve them. Whether it's saving for a vacation, a major purchase, or an emergency fund, involve your children in the goal-setting process and celebrate milestones together.
• Avoid Impulse Purchases: Demonstrate restraint when it comes to impulse purchases and unnecessary expenses. Show your children that it's okay to wait and think before making a purchase, especially for non-essential items.
• Pay Bills on Time: Make a habit of paying bills on time and in full to avoid late fees and interest charges. Show your children the importance of honoring financial obligations and managing debt responsibly.
• Know Your Credit Score: Knowing your credit score is important for understanding your financial health and your ability to access credit on favorable terms. Review your credit report Dispute incorrect information. You can request a free copy of their credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year through AnnualCreditReport.com. Read Understanding Credit Scores for more information and tips.
• Invest in Your Future: Investing in your future retirement is essential for achieving financial security and peace of mind in your later years. Check out our Retirees page and utilize our free online Retirement Plan Calculator.
• Manage Your Finances: Texas Bay offers a wide range of tools to help you manage your finances. Start out with our Financial Wellness Check with Credit Enhancement. Use our online Financial Calculators to build your budget, set goals, plan for retirement, and more. And, of course, manage them on the go with our e-banking tools.
• Your Financial Literacy: You are never too old to learn and earn with the Zogo Financial Literacy app. It’s free and offers tidbits for all educational levels and ages. And Texas Bay has an active blog with financial education and tips for all ages and life stages.