Financial planning tips for life's milestones
Have life-changing events headed your way? Whether it's marriage, the birth of a child, a home purchase or retirement, you can plan financially for those milestones.
To start, CBS News financial analyst Jill Schlesinger recommended automating your savings.
"We want you to say, 'Here's a fixed amount every single month. Pull it out of my checking, move it into savings.' If it's retirement, you want to sign up for that retirement plan, at least into the [corporate] match, and if you've got more money beyond that, keep going. Try to automate it," Schlesinger said Wednesday on "CBS This Morning." "A lot of plans have auto-escalation, meaning a percentage a year extra can go into your savings."
If you're debating between saving for your child's education or for retirement first, Schlesinger recommends prioritizing your personal financial security.
"We want you to establish that emergency reserve, pay down your debt, and get your retirement savings kicked into gear because there is no way to borrow for retirement. Your kids can take out loans. You have to come first," she said.
To save for college, Schlesinger suggested the 529 plan, a government-sponsored savings plan.
"If you pull the money out for education, there's no tax due. Think of it almost like a Roth for your college savings," Schlesinger said. "They're great plans."
According to Voya Financial, the 529 plan is meant for higher education expenses, and the earnings are not subject to federal tax, and usually not to state tax. The contributions are not deductible on your federal tax return, however.
Lastly, if you're thinking of buying a house, Schlesinger said to start by number-crunching. Calculate what you can afford, get pre-approved for mortgage before looking for homes and do your research.
"You want to talk to people on the ground in these markets. Don't just search online. It is your responsibility to get the information you need," she said.