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Working Moms
massdreams
member
How much do you save for the kids?
massdreams
member
in Working Moms
DH and I were talking last night about savings accounts for the kids. We're in a position right now where we don't have the ability to save much in the kids' savings, but doing so is definitely a much bigger priority for me than for him. How much do you save per child each year on average? Feel free to mention amounts or percentages if you aren't comfortable sharing the actual figures. What type of account do you use to save the money in?
And if you have kids that are a bit older and in school, did you find that you could save more once you got rid of daycare expenses? Or did after school expenses, summer care, school activities... add up so there wasn't a significant difference?
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Re: How much do you save for the kids?
We are currently doing $25/month for each kid in their 529s for college. Savings accounts for their '1st car fund' were started and money from grandparents and such for gifts go into those. They also have piggy banks so we have them put spare change into them and when grandma sends a dollar for Valentine's day (big deal at our house!) they get to put it in there too!
It's not much but we figure it will add up eventually. Hoping to do more for college funds when daycare costs go down...hoping....
We look at this differently than most people I've talked to. We aren't currently saving specifically for DS. He does have a savings account with gift money in it (even if he gets $5 in a card we'll transfer the money over). As for long term savings - we have a goal in life of not being in debt/reducing the amount of interest we pay. So, our next step is home buying. We have a large down payment and then will put gobs of money into the house to get it paid off quickly b/c we'd be paying more interest than we would be earning in a savings account. Once a house is paid off, college savings will be the focus. We only plan on having one kid, and we'd like to pay off a house in 5-10 years depending on how large of a loan we end up taking out so this plan should work for us.
We haven't really designated a set amount to put aside for college yet because we're focused on buying a house. We already have a down payment but we're not really sure what our new monthly expenses are going to be. Once we get into a groove as home owners, we'll add college savings to our budget.
However, when DD was born, she received $5,500 in cash gifts ... instead of using that money to buy baby items, we're putting all that aside for her for when she's older (we keep meaning to set up a 529, but right now it's just in a savings account.)
We don't have a traiditional savings account at the bank for DD. She has a 529 account, where we put all cash gifts from her grandparents and we tend to put lump sums of cash from our own accounts in periodically. We don't have a set amount we put in from our own funds. If money was tight, we'd fully fund our 401ks and IRAs and put what we could spare after that into the 529. Even $25 per month gets you earning some interest (in a savings account) or seeing some return on your investment (in a 529 with money invested in some kind of fund).
We have a regular savings account where we put any gift money he receives. We also plan to save for college in an ESA/529 type of plan. When he is old enough for an allowance we will encourage him to put a portion into savings. We plan on him using his savings account for anything he wants to save up to buy: first car, concerts, trips with friends, etc.
We are now doing $400 per month into a 529 plus we deposit any $$ gifts into that account.
EDIT: I wanted to add that it is great you are thinking about saving for your kids, but your top priority should be saving for yourselves. We are maxing out both our 401Ks and have other savings in place so we feel comfortable putting $$ in a 529. However, if we were not able to do these things, the 529 would not be a priority.
We contribute $50/month to each LO's 529 college savings plan. (Depending on our income as the years go on, we may increase this amount.) This contribution is auto-deducted from our bank account. We also have a regular savings account for each LO, but we don't regularly contribute to these accounts. (Most of the time, we put some of our loose change in the kids' piggy banks at home, and then after a few months we deposit that money into their bank accounts.) When the kids are around school age, we'll probably start giving them an allowance, and this is the account they will use to put in their savings from that.
We did $100 per month per child until DH lost his job in August. We plan to resume that ASAP, and increase it each year (the goal is $300 per month for each child, but I don't know if/when we will get there.
DS1 in in school now, DS2 and DD1 are in preschool but we have an au pair, so I don't need before/aftercare and summer camp. If you are going to require before/after care along with holiday camps and summer camp for your child, you might spend around $10k-15K per year depending on your COL. I used to run an after school/ summer camp program and the fees were $450 per month (after care only), $70 per day for any "day off" from school and summer camp was $300 per week (I think there are 12 or 13 weeks of summer).
I think we spend about $500 on soccer for per child each year (fall, winter and spring sessions). Gymnastics is closer to $1500 (that includes a 1/2 day summer camp for 4 weeks). Swim lessons are another $1000 per child for the year (not everyone does everything).
DD -- 5YO
DS -- 3YO
Us too. We are concentrated on paying off what little debt we have and saving for retirement. Untill we can max out our retirement savings every year and be debt free, we only put the money the boys are given in gifts towards college. We also will not have the luxury of saving once they go to regular school b/c we'll be paying for private school.
Ditto. We have been in training positions forever with very little to none going toward retirement. Once we get that squared away, we will be more focused on saving for DS's college. I would love to say that we will go with public school but at this point, we are still undecided so no guarantee that our currently schooling costs will be decreasing anytime soon.
good plan. I know a financial advisor who reminds parents that their child can take out a loan for school, but they can't take out a loan for retirement. Even when we were actively paying off debt right out of school we were still saving at least a little bit for retirement. Right now we are saving a lot for retirement.
I think of it this way - once LO gets to college if for some reason we haven't been able to save enough we can simply change our retirement contributions to be less to free up some income. By then we will have had 20 years of saving at a high percentage, so we'll be in good shape. Investing in our own future is also very important to DS for his future. I don't want him to ever feel like he has to help us out financially when we're super old!
I also don't want DS to have college debt if we can avoid it, but if for some reason our finances change for the worse over the years I would rather deal with college loans than be in bad shape for retirement.
Ditto the above re: maxing out 401Ks etc...
For us, we invest $500/mo in DS' 529. It's based on our goal of being able to provide him tuition room and board at an accredited in state university. There are calculators you can use to determine how much you should be socking away to reach certain levels of provision. We figure if we will foot the bill for in-state major university if he chooses to go elsewhere he can make up the difference in work/loans/scholarships.
We have our investments split up between a Roth IRA/mutual funds/stocks with high dividends. We put money we get for birthdays/christmas/other events for the kids in a mutual fund. We do also save for the kids monthly in an IRA. We will give them that money if they choose college, or save it for weddings/down payment on a house if they don't go to school. We like those investment options better, since it will not affect their ability to get financial aid like a 529 would.
ETA: outside of our 401k contributions we save $600/month and split the money amongst our other investments. When I go back to work full time when the baby is in first grade, we will up that number significantly.
We save $500 a month currently for her. She has close to $10K in her savings account already thanks to very generous grandparents.
We plan to pay for all her college and hopefully help her with a decent nest egg when she gets out in the world.
We also max out our 401Ks and DH has already earned a sizeable pension that will pay us for the rest of our lives. We only owe on our mortgage and 1 car. I do agree with the others that saving for your own retirement should be your first step.
Our LO isn't here yet, but we've talked to both sets of grandparents about having them set up 529s in the respective states where they live, as those accounts have fewer restrictions than what is available where we live. So one scenario we are looking at is that LO will have 3 accounts in 3 different states. How much we put into those accounts will be up to whoever owns that account.
College is going to be ridiculously expensive in 18 years!
Right now, we have priorities of paying off some debts and saving for a down payment on a house, so the regular task of putting $ into DS's savings account hasn't been happening. We put monetary gifts and try to put at least something in there a month, even if just $10.
We had some medical bills (were paying about $500 a month at one point), that were killing us with our extra money. I also transferred to a safer job, but less money, so our financial situation has changed.