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Working Moms
jjdillie
member
Saving for LO's future
jjdillie
member
in Working Moms
This discussion has been closed.
Re: Saving for LO's future
For 529 selection, I did a bunch of research to decide which state we wanted to do it in and which plan we wanted. We decided on one similar to a Roth IRA instead of a pre-paid plan. So I looked into minimal management on our part with the best returns over a 2, 5 and 10 year period. The second most important part to me were the fees. I went with one that had slightly higher fees but better returns and the ability for me to have some more control if I wanted it down the line.
Perhaps you would be best off talking to a financial planner?
We have a 529 for each kid, that we put a minimal amount into every month. And they also have a savings account, but at this point there's not a lot of spare cash after 2grand a month for daycare.
It always shocks me on here that people seem to have so much money. We are younger parents, had our first at 25, so we're still getting established. Our first priority is to save so we can move from out townhouse to a single home.
I want to help my kids as much as I am able to, but I also believe in working hard and getting a scholarship. That's how I got through college with minimal debt. Everyone I know in real life has loans to pay off, and i also think it's fine to go to a less expensive school.
Thanks for the responses. I don't really know much about 529's other than it's a way to save for college. I'll look into it.
In addition, we have a good amount of stock that we plan to allocate toward their education. It consists of bonus awards I've received over the past few years (and a small amount from DH's bonuses). We just live like we don't have it. We haven't put it in their 529s because we're thinking private school. We'd also like to be able to access it in an emergency without the 529 penalty.
My parents borrowed to send us to college. I certainly worked hard, knowing what they sacrificed to send me to college. My siblings didn't have the same mentality. I ended up paying back the loans my parents took on my behalf, but they're going to be paying off what they borrowed for my siblings until they die. Literally. I want my kids to be able to attend the college of their choice, but they will know that if they f up, we'll pull the funding and they can do it on their own.
529s for both girls. We put $250 in per month, per child, and that's projected to pay for about half of their college come that time. The rest of the bill we'll cover as we go.
We have saving accounts for the kids. We contribute a small amount to monthly and all monetary gifts the kids get are deposited in their accounts as well. DS1 is three and while he doesn't have $18K, he does already have 1.5 years of college tuition to a state university in his account (at the current rate, of course, but still). When I get around to it, the plan is to open two more mutual funds in our name and earmark them for the kids, but we won't be doing a 529, and if the kids don't go to college, they don't get the money.
We have a few other investments for us only and of course 401K's. We are aggressively saving for us, for retirement and paying off our mortgage. By the time our kids are in college, we will be mortgage free, thus freeing up a lot of cash to help at that time.
Anyway, maybe we are being selfish, but this is what we think is best.
We are in the same position. We have a 529 for DS (will open one soon for DD) but we don't contribute to it each month. My parents give DS money for college on his birthday and Christmas and that's all that is in there. We also have a savings account for him (will also open on soon for DD) but the only money that goes in there is small amounts given as gifts.
We didn't really start getting smart with our money until DS was born. We have done a lot in 3 years, but aren't to the point of serious savings into his 529. Once we hit other financial goals, however, we will be able to do that (especially when we aren't paying for daycare). The long-term savings potential in investments is so great, however, that we felt it was important to have a 529 early that way we could maximize the savings.
To address OP's question. We liked the 529 savings plan the best. I researched different 529 plans and determined that my state's plan was not the best. We choose a state based on the mutual fund options. We have some in our Roth's that we really like and choose a 529 that had those funds. We also wanted a 529 that invested like a Roth, one that didn't automatically move investments based on age, and not a pre-paid college plan.
We have a regular savings account that is for her college fund. We put money in it monthly and do not touch it.
That said, we unexpectedly ended up with a decent-sized inheritance from my dad's retirement fund when he passed away last year from cancer. He was a college professor and I talked with him in his final days and told him I would use that inheritance for the kids' college funds in his honor. So, we actually have a lot more college money put aside for them than we expected to have, due to unfortunate circumstances. That money is in an IRA that our financial advisor manages and I just put the required minimum distributions into the 529s annually, plus we contribute small amounts here and there to the 529s.
So this is something that has been weighing on me for the past few years. DH and I make really good money but we are clueless on how to invest it. DH is very risk averse and thinks the stock market is like gambling
. Every year I tell myself to get some books and start thinking about it but it always gets put off. I think a financial advisor might be the best route for us. For those of you who have one, how did you find them? Thanks in advance!
@ss265 We wanted someone local who we could meet with in person. We researched different national companies and ended up with Edward Jones because we were just starting out, didn't have much money, and they seemed open to working with people with small portfolios. We had a list of questions and DH cold called different advisors in our metro area. We chose who to use based on the answer to our questions. The things that we were looking for were:
~ mid career who would have our portfolio for awhile
~ planned to stay in the area
~ was likeminded to us in how to invest
~ understood our short and long-term financial goals
~ would advise us based on all aspects of our finances (work retirement accounts, personal savings accounts, kids college accounts, saving for a house, etc.)
That said, DH and I have been slow to start a 529 because we live in a state with no income tax so there's no tax benefit for us. We do plan to pay for college but for now we're just generally "saving" in various accounts that aren't earmarked specifically for college. One thing we'd like to do in 2014 is get serious about investing and managing our assets.
In our 20s we would not have been able to save a ton for DD either. But we're in our upper-30s now and DD has about $15K in her savings account and about $1K in a 529 started by my parents. It's just easier for us b/c we have no debt except a mortgage and are both upper-mgmt. in our careers at this point. Especially DH.
You'll get there. You're just at a much different stage career-wise.
Me:27, DH:28 - DX: MFI, varicocele repair Nov 2011
Post-Op SA: Count- 15 million, Motility- 75%, Morphology- 3%
IVF with ICSI - Stimming 10/4/12 - 10/13/12, Lupron Trigger
ER 10/18/12, 12 eggs retrieved, 8 mature, 5 fertilized
5 day transfer 10/23/12, 3 frosties
Beta #1 11/5/12: 453, Beta #2 11/7/12: 1,013, DD born 7/19/13
We do not have a 529 but have an investment account and savings account for DS. We contribute to it regularly and It's all managed by our advisor. To be honest it's all very complicated because we work really hard to minimize our tax burden.
Now that said we are older parents (DH is 40, I'm about to be 38, DS is 2.5), and I think that's really important to note here. At least from what I know, there is a massive difference between 25 & 35 in terms of most people's financial situations. So it's kind of like comparing apples to oranges. Typically older parents are more well-established in their careers and further up the pay scale so what is "do-able" is pretty different. 10 years ago I was brand new in my career and making pennies (yep, I switched careers at 27). Now I'm at the top of my firm making very good money and I get really sizable bonuses. So - if you're 25 and even thinking about planning like this, let alone contributing anything I give you a TON of credit! Please don't compare yourself to those of us who are a decade or so further down the path. It's not fair.
As to paying for college, there are pros/cons for both choices. We'll pay because ours was paid and we can afford to pay while not doing any harm to our retirement etc... I would not advise anyone to take out loans or jeopardize their own retirement to pay for secondary education. That just seems silly to me.