My wife, Carrie is an avid reader of the “AMB” and often comments on advice she read or DIY tips she learned when it comes to saving money. With our first nugget on the way (she will be here in August!!!), we have to literally become human sponges in order to soak up all the “Whatcha’-need-to-do-when-she-does-this-is’s” that are thrown our way. Even if you aren’t a parent, you probably have a pretty good idea just how expensive these little bambinos can be. If you don’t, just ask to have a look at my wallet; it actually frowns 24/7.
My wife and I are creatures of habit. Our one ritual that I REFUSE to give up is our Sunday evening trip to Chipotle for dinner. Every single Sunday we drive 30 minutes round-trip to our beloved “Chipotle Bean”. 2 burrito bowls and 1 bag of chips = heaven on my tongue and $14.88 out of my wallet. Now think “college savings”. Eased right into that transition didn’t I? With all the expenses life throws our way where in the heck is one supposed to start putting away for our children’s future education expenses? In comes the 529 plan.
With a 529 any money you save grows TAX-FREE as long as you use the money to pay for college related expenses (tuition, dorm, food, sometimes even computers). How does it work? The easiest way is to setup auto-draft from your bank and deposit as little as $25 a month into the 529 which then gets invested into mutual funds that are designed to grow and automatically re-balance to be more conservative as your child gets closer to graduating. Let’s say Carrie and I decide to cut back our Chipotle trips to once a month (no way in hell this would happen), BUT that’s $45 a month we could be saving! If we put $45/month in a 529 for our “nugget” for 18 years and average a 7% per year return that’s $20,000 saved! If you saved just $100 a month that would give you $43,000! The cost of school isn’t getting any cheaper and interest rates on educational loans are only rising. What’s one more bill added to the plethora of living expenses we encounter as adults and parents? It’s better to plan today rather than telling little Suzie or in our case, little “nugget” in 18 years that mommy and daddy can’t afford college.
Now go!
Go speak with your financial advisor to find out more. If you don’t have a financial advisor already, Allison or Vanessa would be happy to help you with a dependable reference… aka ME!
Cheers!
What are you doing to save money for your child’s future? Is there a different plan or method that you use?
Save and his AMB fan and wife, Carrie are expecting their first baby girl bundle in early August.
Great article. We set aside
an amount each month for our kids AND every dollar they receive for
birthdays, holidays, etc goes straight into their accounts! We recently
celebrated my 4 year old’s bday and really wanted to say “in lieu if toys/clothes,
any monetary donation for college will be appreciated!”. We didn’t of
course bc it would have been tacky! But if you know parents who have
529 funds, give the kids $10 for bdays instead of toys!!