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Family and Life

Whether you’re taking care of multiple children, a disabled spouse, or elderly parents, you’ve likely experienced the high cost of dependent care firsthand. With expenses from babysitters to after school programs, it can be difficult to stay ahead of all your other financial obligations while spending on dependent care.

To help make dependent care more affordable, President-elect Donald Trump has included a new provision in his child care plan: the Dependent Care Savings Account. It’s a tax-favored account that anyone with dependents can contribute to in order to save for eligible expenses. Read further to learn exactly what it is, how it works, and who will benefit from it.

What Is The New Dependent Care Savings Account?

Trump’s child care proposal includes creating a Dependent Care Savings Account (DCSA). Parents can contribute up to $2,000 per year to this tax-favored account. Contributions are tax deductible and grow tax-free. Much like a Health Savings Account (HSA), money in a DCSA doesn’t expire. Unused contributions can even be used for a child’s college education expenses once he/she reaches 18.

How Does The Dependent Care Savings Account Work?

DCSAs will be available to everyone regardless of employment status. They won’t be tied to employer accounts.

As previously stated, the maximum annual contribution for DCSAs will be $2,000. Unlike employer-sponsored Dependent Flexible Spending Accounts, unused money in a DCSA will be allowed to carry over year after year. In this way, substantial amounts of money can be accumulated for future dependent care expenses.

Examples of eligible dependent care expenses include:

  • Children
    • After school programs
    • Babysitters
  • Disabled  Spouse
    • In-home care
  • Elderly Parents
    • Adult day care
    • Assisted living

The exact details on how claims will be processed and reimbursed have not been released yet. We suspect it’ll operate similar to an HSA, but on a federal level.

Who Does The Dependent Care Savings Account Benefit?

Anyone who spends money on dependent care can take advantage of the DCSA and reap the tax benefits.

It should be noted that dependents include disabled spouses and elderly parents, not just children. This broadens the applicability of the money put into the account and makes it all the more easy to use it for eligible expenses.

Low-income parents will receive an additional benefit when using DCSAs. The government will match half of the first $1,000 contributed each year. That’s $500 in additional benefits each year.

Trump hasn’t laid out the specific details on how he plans to fund the government match for contributions made by low-income parents. That, however, would come at a large cost. Over 40% of American households have children. If every low-income parent contributed to DCSAs up to the government match, he would need to find a viable way to fund all of those accounts.

His general answer to the funding question is that it’ll be “offset by additional growth.”

Final Thoughts

It’s important to note that in order for DCSAs to have a large scale impact in reducing the cost of dependent care for American families, parents will need to take advantage of the account and contribute to it. Given that participation in FSAs and HSAs has been increasing, the outlook seems promising.

The $500 government match for low-income parents is a lofty provision but may be underutilized in reality. Low-income families may have a hard time coming up with the disposable income to contribute to a DCSA in the first place.

President-elect Trump’s child care plan, specifically the creation of the Dependent Care Savings Account, depends largely on utilization rates. We have our eyes peeled to see how this change affects finances for the U.S., especially families with children or elderly parents.


Ah, millennials. They are the first generation to grow up with iPhones, FaceTime, and GPS apps. Most of their banking is done online and, thanks to Amazon, the majority of web purchases arrive at their doorstep within 2 business days. They hit the generational jackpot when it comes to convenience and ease, it would seem.

And now, according to a new study from Fidelity, they are also very likely to still be receiving financial help from their parents, even if they’re “out on their own.”

The newest study, published today, was conducted between July and August 2016, and included responses from 305 Millennials (aged 25 to 35). They had an average salary of $68,000 and an average total savings of $67,000. Of these 305 young adult respondents, 48 percent had a 401(k) and 28 percent had an IRA. Also, note that Millennials as a whole also have an average of over $37,000 in student loan debt. (They do hold less credit card debt than the generations before them, though.)

A very interesting find of the study, aside from their financial allocation habits, was the increase in their support system. From the participants’ responses, the study found that the Millennial generation is cutting their parents’ financial cord much less, and much later, than in years past.

Keeping the Cord Intact

Nearly half of these Millennials (47 percent) own up to letting mom and dad pay for a number of things since they’ve been on their own. Some of these costs include family-type expenses – like cell phone plans, streaming services, subscriptions, and insurance plans. They may also include more specific contributions, like car payments and grocery bills.


More notable than budget help, though, is the fact that there’s been an uptick in adult kids actually moving back in with the ‘rents.

This new study found that 21 percent of Millennials report living at home, which is up from the 14 percent found in 2014’s study. While some of these kids never left, a good number of them consciously chose to move back home after being in the real world for a few years. Of course, 67 percent of respondents also said that it’s more acceptable now than ever for adult children to move back home with their parents, so perhaps that’s one encouraging factor.millennials-4

Another 66 percent of Millennials said that they live outside of their parents’ home and cover all of their own expenses. Of those truly independent folks, though, 25 percent of them admit to having moved back in with their parents at some point for financial reasons. (Only 12 percent of Gen X respondents said they had done the same, along with 9 percent of the baby boomers.)

So, what are these young adults doing with all of the money? If they aren’t spending on rent or their own cell phone plans, where is it going? Turns out, they’re saving most of it!

They Are Saving More Than Their Older Counterparts

A surprising 85 percent of Millennials said that they have some form of savings. This is up from the 77 percent who said the same in 2014’s study.millennials-3

Emergency funds are at the financial forefront, as 59 percent have money saved up for serious, unexpected costs. In fact, not only do a large number of them have emergency money tucked away, but they also, on average, have more money saved up than the older generations. Millennials have a whopping $9,100 tucked away on average. They say this amount should cover about six and a half months of their living expenses. Gen Xers, on the other hand, only have $8,700 and Boomers? A mere $7,100.

Looking further ahead, the majority of Millennials are also saving for retirement. When the study was conducted in 2014, 51 percent of respondents said that they had a retirement savings account. This year’s study, however, found that number had jumped up to a solid 60 percent.millennials-5

Sure, this generation is much younger and admits that retirement is still far, far away. But the actual number of them saving for their golden years is still comparable to older generations. Of Gen Xers, for example, 61 percent are saving for retirement, along with 67% of baby boomers.

But They Aren’t Doing Enough to Make That Money Work For Them

Sure, the Millennials seem to be doing a great job at tucking money away. Perhaps that has to do with their parents’ willingness, and ability, to help out. I would imagine this makes it much easier to put cash in a savings account. There’s extra money when mom and dad are covering auto insurance bills each month or you’re riding their cell phone plan coattails. But hey, to each his own.

There is one problem, though. Young adults don’t seem to be saving their money as smart as they could.

The vast majority of Millennials are saving their emergency fund in a traditional savings account. There, it’s likely to earn less than 0.25 percent in interest. (According to Bankrate, in fact, the average money market and savings account APY (as of 10/14/16) has been 0.11% for 22 consecutive weeks.) Of course, this isn’t going to accumulate the same return as a brokerage or investment account.

Speaking of, only 8 percent of Millennials are keeping their money in one of those types of accounts, compared to 11 percent of Gen Xers or 23 percent of baby boomers.

What Are They Focusing on Instead?

Many of these 25-35 year olds are more conservative than they should be when it comes to their money. As a result, they are missing out on potential returns.

Though 63 percent have investment accounts, only 9 percent of Millennials would use “investor” to describe themselves. Instead, 46 percent would identify with being a “saver” and 44 percent would instead say they’re a “spender.”

They’re tucking cash away in IRAs (28 percent) and 401(k)s (48 percent), along with the emergency funds mentioned above. Accumulating more savings is a priority to 44 percent of them, as is building an emergency fund (also 44 percent). But this younger generation is also very concerned about the here and now.

So, why are Millennials moving in with their parents or taking advantage of mom and dad’s financial help? Many of them say it’s in order to afford just their essential living expenses. In fact, 38 percent cite this as their reason. A whopping 33 percent are working to reduce their credit card debt. Another 30 percent of them are trying to pay off their often-crippling student loans. They aren’t racking up the high credit card debt that their older counterparts accumulated. Instead, they seem to be very worried about financial security.

Fidelity asked them whether money concerns keep them up at night. One-quarter of respondents said that yes, they worry “all the time” about their financial future. (Interestingly enough, this is about the same percentage of Gen Xers and baby boomers who said the same thing.) Another 17 percent said that they worry a few times a week or more.

So, What Does This All Mean?

It’s obvious to the younger generation – at least, to those who are paying attention – that their financial future is less secure than generations past. They have seen a number of financial crises in their lifetime, which may have impacted how they view money, debt, and the importance of saving for the future.

They have heard talks of Social Security running out. They’ve seen high unemployment numbers in recent years, and witnessed a house market crash. College educations, which were supposed to guarantee their careers, have become more less affordable. A degree also doesn’t get them as far in the working world as promised. Our country is in record debt, as are its citizens. Personally, I think Millennials are right to be a little spooked. I’m glad to see that we are shifting to financially-conscious young adults, even if moving back home is what’s allowing that to be possible.

As long as our up-and-coming generations are getting concerned with their money, their financial futures, and the need to stay out of debt, our country has a chance to shift its mindset. Perhaps something else will change within our society that can support Millennials’ penny-pinching. Until then, this seems to be the logical (and more readily acceptable) option.

Parents, don’t downsize your home just yet – the nest might not stay empty for long!


New baby? No doubt this new arrival has turned every aspect of your life upside down in the best possible way. Now is the time to make sure your financial house is in order. Here’s a 10-step account and financial checklist to lay the groundwork for your little one’s successful future.

New account checklist for new babies

1. Apply for a Social Security number for the baby: An SSI number is the linchpin to open a bank account in your child’s name, purchase savings bonds, obtain medical coverage and access government benefits.

2. Review your life insurance: If you don’t have life insurance, you should get coverage as soon as possible. If you already have a life insurance policy, check to make sure it’s adequate to cover the needs of the new addition to the family.

3. Pick a guardian: Choose a family member or close friend who is willing and financially able to care for your child, should you or the other parent pass away or become incapacitated before your child turns 18.

4. Set up powers of attorney: Put in writing your legal power of attorney, which sets out who will be responsible for your financial and personal affairs should you be unable to make those decisions for yourself. You also should set up a health care power of attorney that makes your wishes known in the event you become seriously ill and are unable to participate in decisions about your care.

5. Write your will: It’s not just wealthy people who need a will. Every parent should create a document spelling out how his or her estate should be handled. The will may also include or reference legal guardianship and powers of attorney.

6. Open a savings account in the baby’s name: Choose a no-fee, no-minimum balance, online savings account. You can link the savings account to your checking for automatic withdrawals.

7. Set up an emergency fund: You should put aside money from each paycheck into a savings account with the goal of having sufficient funds to cover living expenses for six months.

8. Review your work benefits: Confirm how much paid (and unpaid) maternity leave is offered through the birth mom’s employer, and whether paid leave is available for the other parent. Determine how you will obtain health benefits for the baby, either through an employer or government plan. Consult with your human resources office on flexible spending accounts and other benefits that may apply to your situation as a new parent.

9. Check in with Uncle Sam: You can claim a tax credit of $1,000 for your new baby and take an annual tax deduction of $3,950 for each dependent child. You can also receive tax credits if you adopt a child and/or if you pay for child care. You should review your withholding status, which could mean that more take-home money is available to increase your emergency fund every month, for instance. Single parents may be able to claim head-of-household status.

10. Start saving for college: Set up a 529 savings account, which generally is not subject to federal and state taxes if used to pay for college tuition. (If the funds are used for other purposes, earnings may be subject to a 10 percent federal tax penalty.) Details on fees and other aspects of the 529 plans vary by state, so do your research.


Accumulating money is not a real goal for anyone’s life. Growing wealth is not the point. People don’t work hard because they want to see their bank balance grow; those of us who track our finances and chart our net worth over time aren’t trying to compete in some financial competition.

I imagine there are individuals who do have an approach to money wherein the increase of the bank balance is the ultimate goal. But this approach misses the point. Perhaps these savers and earners haven’t given enough thought to why they want to grow their wealth, other than believing that society dictates that they do so — or they idolize people in the media who flaunt their wealth.

Money exists to be used in some kind of transaction — that’s all. So there’s no point in accumulating money just for money’s sake.

This is a concept I’ve covered on Consumerism Commentary in the past, but I bring it up again because it’s always relevant, and maybe it’s good to have reminders once in a while.

I don’t write about my own business much on this website. My business is based in the act and process of blogging. Consumerism Commentary has been my business. And while I think it would be fun to write about it more, as any business owner would like to write about his own business, I wanted to avoid that. If my business was a store I had planned with a friend, I would write about that here.

Writing about blogging as a business just didn’t seem right for this website, because I’d be “blogging about blogging.” The only people who may be interested in that are other bloggers, and Consumerism Commentary reaches a much wider audience than “other bloggers.”

Therefore I’ve stayed away from writing about how I earned money from my business, how I built that business, and how I eventually sold that business for an amount of money that would be potentially life-changing. And it’s a shame I’ve avoided the topic, because it’s really interesting, and I think other people, both those who consider themselves bloggers and those who don’t, would like to hear more about it.

I took the opportunity to write about my experiences and what I’ve learned from turning a hobby into a business for the new Plutus Awards website.

(For those of you who don’t know, The Plutus Awards is an award ceremony I founded. The awards highlight the best in financial media and products. It was born from my own enjoyment of running awards ceremonies, something that started in college with my creation of awards with superlative and funny awards for members of my university’s marching band, with the ceremony at an annual banquet.)

This epic article was influenced by questions I get all the time from other bloggers who want to find a way to earn consistent income from their websites. Of course I’m happy to answer any questions privately, but I haven’t had an outlet in which I’ve felt comfortable sharing all the details.

And the massive more-than-4,000-word article just touches the surface — I could write a book about what I experienced over the past twelve years with my unintentional business.

I expected to receive some criticism from the article. I wrote about how I focused primarily on this hobby-turned-business and didn’t seek work/life balance between my work and social life. One reader felt sorry for me, as if I had missed out on something in pursuit of the almighty dollar. I probably took more offense to the reader’s remark than I should have.

There are probably some things that I’ve missed out on in life. I guess I could have spent more time watching movies with friends. I guess I could have tried harder to start a family. But I don’t think my life is any less whole right now.

But for me in the year 2000, earning a tiny salary from a nonprofit and living in one of the most expensive areas of the country, I had to do something about my financial situation. Life wasn’t about the money, but I needed to start paying attention to my finances, and I needed to figure out how to get my life moving in the right direction.

When you have no money and you begin thinking about what the future consequences will be, money starts to plays an important role in your life. The trick is being able to prevent yourself from seeking money above all else. You can prevent that by keeping larger goals in mind, by thinking about what the point of having money is. It’s more than just “freedom.” What would you do with “freedom” if you had it?

For me, it was starting a foundation. In 2000, I knew that if I had enough money, I’d start a foundation that focused on arts education. It might have been a little naive to have that as my plan, but the idea isn’t too far-fetched.

And if you’ve read How I Built a Seven-Figure Blog, you know that I didn’t start a business to reach that goal. I didn’t start a business at all. I focused my blogging, something I had already been doing for years, on a topic I wanted to learn more about — personal finance and money management. All I wanted to do was get better at managing the money I had.

After several years as an adult ignoring my finances, I had to make my life about money, at least a little bit, in order to improve my situation. Having been born into a middle class family in the wealthiest country in the world, I had been failing at maintaining that level. My situation, goals, and needs would have been different had I been born in poverty or to a wealthy family.

Now that I’m in a different financial situation, after seeing that hobby turn into a successful business that I later sold, perhaps it’s easy to say that life isn’t about money. When you have enough in the bank to be secure — you don’t have to rely on income from an employer, for example — it’s easier to focus on the grander goal.

Speaking of which, I’m happy that I’m able to reach some of my bigger goals before the age of forty. Remember that arts foundation I’d dreamed about? Well, I’ve changed my approach, but I’m still in the general vicinity.

I’m establishing a scholarship at my undergraduate university for music interns. Did my music education degree relate to how I’ve built my “career” over the last decade? Not directly, and that’s why it might not make sense to people why I want to give back to my university. But my experiences at my college did shape me and my approach to life.

But more importantly, I was required to take an internship for my minor that got me started with the organization that allowed me to get into a financial mess in the first place. The stipend through my scholarship should help students be able to afford to take the best internship opportunities without having to worry about how they’re going to earn a living while working for little or no money.

This will help level the playing field, so the best internships can go to more than just the wealthiest students who can afford avoiding work for a semester.

In addition, I’m also starting a foundation — but this will be related to financial media, like the Plutus Awards. I’ll be announcing more information about that soon.

So I’ve written quite a bit about the work side of my life, and lest anyone thing I don’t have perfect balance between work and non-work aspects of my time on this planet, there’s been a lot going on. Last month, I mentioned my apartment received storm damage. The landlord is still trying to repair the apartment — this is over a month after the incident — and I decided to exercise a clause in my lease that allows me to leave.

There is a world of choice available to me right now. I could do virtually anything. But, I made a commitment to work with a music group based in Princeton, New Jersey throughout the rest of the summer, so I won’t be leaving. I am signing a seven month lease, moving just over the border to Yardley, Pennsylvania, to an affordable but smaller apartment.

I’m downsizing, getting rid of some furniture and other items I’ve accumulated over the years. The lease will get me through this year’s Plutus Awards, and once that is over, I’ll be ready to think about leaving the area, spending the winter on the west coast with my girlfriend and family, and giving myself the opportunity to travel more.

Of course, I’ll need to “balance” these changes with working on my new projects.

Unless I decide to stop and live off my investments for the rest of my life. I’m just not ready to retire, though.


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In Ron Lieber’s The Opposite of Spoiled, the author offers suggestions for raising money-smart kids based on the stories of hundreds of parents.

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Why Socrates and Plato Are the Only Financial Gurus You Need

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Forget today’s best-selling financial gurus and authors. Socrates and Plato covered all that you need to know about wealth and life.

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The Urban Institute has issued a report stating the Millennial generation will have the lowest rates of marriage by age 40 than any previous generation. The report contemplates a variety of reasons for this shift, including a reduced role of marriage in a family household and the effects of the latest recession. But what does […]

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I met my dad for dinner on Father’s Day earlier this month, and we had a deep and somewhat difficult discussion.

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Can You Sue Your Parents for College Tuition?

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Crying baby

This story has all the makings of something viral. It fits right in with our fascination with people doing things that normal Americans wouldn’t even consider doing. We gawk at reality television shows and follow the stories about their stars, like the recent news about the couple from the “Real Housewives of New Jersey” show […]

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Since before the recession, an increasing number of mothers say they’d like to work full-time. The Pew Research Center analyzed new data from the U.S. Census Bureau and conducted a survey to discover this and other family financial dynamic trends. In 2007, 20 percent of mothers called full-time employment their ideal situation, while by 2012, that […]

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