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?

Comments

  1. It is frustrating for me to read how much some nannies are making. They actually have insurance, social security and retirement funds? I am from Kansas working as live in nanny in Waterbury CT and am no where near making enough money to be saving or investing. I don't see how I ever will working as live in. I make so little next to my live out friends in town. The salary was so much higher than I could get in Kansas but can't do anything on this salary. One night in New York city can spend my week salary. Frustrating. When/how do nannies find these higher paying jobs?

  2. Don't worry Waterbury CT nanny, I am a live out without a savings either. But, there are zillions of articles on this site on how to find a good nanny job. Consider this job you are at a stepping stone and experience for a future job .

  3. Nanny in Waterbury you should save as much as you can now. I saved so much as a live in at $400 per week in the 1990s. Rent is $12,000 per year at least your area. Also, you aren't paying for heat, gas, electricity & water. So consider that you are making another $12,000on top of your salary. Save now.Nanny & Personal AssistantBeth in Durham CT

  4. My parents and boss told me a few weeks ago that I should use a cloud site. I am a little confused but this is what I know…I already use a cloud site for my photos on Kodak website. I suppose my checking acct info is online at the bank's cloud site. How to buy space for my other info on a cloud site still confused me though. ?? It helps your explaining it's safe because could sites don't crash like a computer. But can they be hacked into is my question?!!

  5. No I don't have any info on a cloud site yet. But, Michelle, click on the amazon site listed in the article. It describes a Cloud Site well. Maria L., Miami FL

  6. Stephanie,Thank you so much for doing this series of articles. I think they are something all nannies should be aware of and it is something nannies I know and I discuss often.Many nannies may not have had money management classes or go in to areas where it is so easy to be tempted to shop, spend, and not save. I know I was guilty of this when I was younger too.Waterbury Nanny, it is hard for me to give you advice without knowing history of what you have done in professional development, education you have done, how and where you are looking for jobs and presenting yourself to families. I state often find ways to learn as much as you can in ways that you can document this and put on your resume. I helped a mom in my neighborhood today deal with her new nanny search. She basically wants a clone of me. And like my bosses she is willing to pay for it. But being a clone of me means taking the coursework (I did mine in a year online for $99. One day's pay. I get perks and benefits that are great too. Plus I'm a live in a great place, etc.)I volunteer a lot with kids, and have picked up other things in training sessions for those organizations. Plus, I have gotten additional references that I use in the nanny world too.

  7. Good points about keeping important info on a cloud site. I think the majority of nannies don't even pay taxes and it's a huge mistake. I love seeing how much is in my Social Security Statement each year.Mereidth in Colorado Springs

  8. Be careful when using freecreditreport.com. They unknowingly signed me up for a membership to Experian in the fine print. They charged me unknowingly $14.95 per month for 8 months. THEY CHARGED ME $119.60 without my knowing it. The membership did nothing for me. I never used it, haven't a clue what it would do for me.

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