Gerber Grow Up Plan and Saving Money for Baby's Future

ChiccoBeanz

Afternoon Ladies,

   I was curious to know if anyone has ever used the Gerber Grow Up plan or any other insurance programs or something like that with any of their children. How does it work? What was your experience? Any tips for FTMs or people who are just now deciding to make this type of decision for their family?

  Also, has anyone started saving towards their baby's future? How are you going about it? What advice can you give ? Any warnings ? Let's educate each other. 

ketobaby

I plan on having a small savings for my son to help supplement some of his college expenses. I don't plan on putting every last dime I have into the account though. We first need to save to buy a house, pay off our student loans, and continue/start to save for retirement. I'm really hoping this kid is like his momma and ends up with good grades and a scholarship. I will definitely be helping my son lean towards an in state college. I know too many couples who have gotten into debt or had their retirement ruined due to helping their kids pay up front for college.   

Sunny2015

I know MIL did the Gerber plan for DH, I could probably ask her about it, but we have already started our own sort of savings account. Any change we find or get back (like when we pay with cash) we put in a jar and will eventually get it to the bank when we have time to. We'll eventually put aside a set amount each month that'll go towards that savings or college fund.

willashbaby

We're doing a 529 tax deferred savings account through NYS. We plan on saving enough to pay for tuition at a state university, anything beyond that is up to our kid. I generally put any extra money into a TDA retirement fund through my employer, the account earns well and if I ever need to borrow from it I can. 

ChiccoBeanz

willashbaby said:

We're doing a 529 tax deferred savings account through NYS. We plan on saving enough to pay for tuition at a state university, anything beyond that is up to our kid. I generally put any extra money into a TDA retirement fund through my employer, the account earns well and if I ever need to borrow from it I can. 

Smart move

Cmagno

We will also be doing a 529 plan. We have one set up now for DD through fidelity and automatic transfer a set amount each month, it's easy and we never forget that way. After LO is born and I'm done with maternity leave we will do the same thing for her.

LMJL

My brother actually gave us a 529 account for the baby just this weekend @ our shower. He's an actuary, so very on top of these things, unlike his lil sister the actor. he's doing all the work to set it up & starting it off with a nice deposit. So if the LO decides to go to college, they'll have uncle Matt to thank!

KRH6829

Please be careful how much you invest in a 529 plan. There are very steep penalties if you take the money out for anything other than education. As my financial planner put it...if you have a smarty pants who gets a scholarship to college, you are going to pay a huge penalty to get the money out because you won't need to spend it on education. We just have an IRA set up for our son and will do the same for our daughter.

Cmagno

KRH6829 said:

Please be careful how much you invest in a 529 plan. There are very steep penalties if you take the money out for anything other than education. As my financial planner put it...if you have a smarty pants who gets a scholarship to college, you are going to pay a huge penalty to get the money out because you won't need to spend it on education. We just have an IRA set up for our son and will do the same for our daughter.

We really debated this but you save so much on taxes with a 529 verses an IRA for college expenses. Money is hard!

BostonBaby1

I'm going to go out on a limb here and say that what I'm doing is completely different. No 529 or IRA for us. At least not right now. To me, I think it's just putting off the taxes until later when the tax rate will be higher. I know, it's not the norm in terms of thinking… But I feel that a 529 might lock my child into having to go to a public university or specific private one. Since I have a background in finance, I feel more confident managing my child's account than I do having it sit in some mutual fund that I have no control over.

It's too early for us to do it, but I think we will just start a straight savings plan for any babies. But first things first, private school here can cost well over $50,000 a year so we need to figure out what we're doing for pre-K and K through 12.

*ETA- Whole life insurance has a lot of potential in terms of building equity. Perhaps @redfallon might be able to explain better about that?

ChiccoBeanz

BostonBaby1 said:

I'm going to go out on a limb here and say that what I'm doing is completely different. No 529 or IRA for us. At least not right now. To me, I think it's just putting off the taxes until later when the tax rate will be higher. I know, it's not the norm in terms of thinking… But I feel that a 529 might lock my child into having to go to a public university or specific private one. Since I have a background in finance, I feel more confident managing my child's account than I do having it sit in some mutual fund that I have no control over. It's too early for us to do it, but I think we will just start a straight savings plan for any babies. But first things first, private school here can cost well over $50,000 a year so we need to figure out what we're doing for pre-K and K through 12. *ETA- Whole life insurance has a lot of potential in terms of building equity. Perhaps @redfallon might be able to explain better about that?

I think these are great points that I almost over looked. Thank you @bostonbaby1

ReedBabyMama

VERY INFORMATIVE THREAD!!

theawc42

Ive also looked into the Gerber plans and by the time the kid is 18, the plan is (if I remember correctly about $20,000). Ive thought about the 529 plans, but wont the child have to go to a school within that state? I don't want to limit my child if she wants to go to a different school. With my  income my child isn't likely to get a lot of financial aide. So, unless she gets a full ride scholarship for whatever reason, most the cost is going to have to come out of my pocket. I do not want her having massive amounts of student loans like me. SO...that being said, ive calculated that if I can save $100 every 2 weeks (my pay) by the time she is 18 she will have a little over $40,000...that doesn't include anything extra I put in or the interest.

ammnam14

My godparents opened up a bank account for me when I was young and would deposit for holidays and birthdays. I thought that was the coolest idea. Seeing as how this is my own child though I'm not sure I would want to do that. We'll probably just set up an extra account and deposit when we can!

Wouldn't it be nice if college was free for everyone by the time our children graduate hs?

satindawl83

ammnam14 said:

My godparents opened up a bank account for me when I was young and would deposit for holidays and birthdays. I thought that was the coolest idea. Seeing as how this is my own child though I'm not sure I would want to do that. We'll probably just set up an extra account and deposit when we can!

Wouldn't it be nice if college was free for everyone by the time our children graduate hs?

Amen! At the very least, your tuition should be waived/reimbursed if you graduate. Enough people don't graduate that you'd think they would more than cover the people who do.

And if that caused an increase in or graduation rates, what a nice problem to have.

missaero

FYI for those doing 529, if you oull out funds but then your child got a scholarship, you won't incur the 10% penalty. However you would incur income tax if those funds are not used for mother qualifying expense. Essentially if pocketing the money, those funds have simply become tax deferred.

BostonBaby1

Since we are on the subject of "adulting," I'dd like to talk about building savings for just a moment.

The way that most people save is to add up their current expenses and see how much money they have left over. That money then is allocated for savings.

Try flipping the model around. Decide how much you want to save each month, and then figure out how much money you have left over for all of your other expenses. You then cut back where you need to to make it work.

Gingermom15

As soon as we found out we were expecting, we set up a basic savings account for the baby. We went through our budget and decided what we could save each month, cut back on non-necessities to save more, and have ourselves sticking to a tight budget in order to also save for maternity leave and SO possibly getting laid off. We aren't sure what type of account LO will have yet, but the important thing to us at the moment is the money is getting put away for his education. We may use the savings for a private school and/or a tutor and do a separate account for college years once I am done with college myself. I want him to have the best possible K-12 education possible because I believe that will set him up for success better than any amount of money can.

BostonBaby1

Is anyone considering doing prepaid tuition instead of the 529? Apparently one can pay for tuition at today's rate and lock it in for the future. The caveat is that if it is used for an out-of-state school, the rate of return what it be significantly lower.

Do we have any financial planners in the house?

I understand that income can be deposited into a 529 tax-free and if it is withdrawn for purposes other than tuition, income tax must be paid as well as a 10% penalty. Does one need to open up a separate account for making deposits from an already established savings, money market or other account that the parents might have already paid taxes on prior to contribution?

*ETA- is the maximum tax-free gift amount the same for one's child as it is for any other individual?