Author bio: Ksenia Yudina is the Founder and CEO of UNest, the first mobile app that makes it easier than ever before for parents to save for their children’s future. Ksenia is an entrepreneur and financial expert with over ten years of experience in the financial industry. As a wealth manager she helped affluent parents access smarter saving and investment options. She founded UNest to extend the same financial acumen to parents across all income levels and backgrounds. To date, UNest has helped tens of thousands of parents save millions of dollars for their kids’ future.
Cribs. Baby seats. Strollers. Diapers. For new parents, it’s a never-ending parade of purchases, all while sleep-deprived! But, beyond the Target runs, how can you make sure that your bundle of joy has a pile of money available for college or other essential life stages?
Sending your kids to college may seem like a long way off, but every parent will likely tell you the same thing — “time flies.” So, let’s use one of those sleepless hours to set in motion some saving habits that will likely make a profound difference in how you and your offspring address the cost of college and other significant life events.
Start with positive visualization.
We’ve all heard about, and many of us have experienced, the negative and long-lasting impact of student debt. According to Student Loan Hero by LendingTree, among the class of 2019, 69% of college students took out student loans and currently, Americans owe over $1.64 trillion (and growing) in student loan debt. Family by family, paying off student loans is a massive damper on progress and ambition.
Having the background on the long term implications of significant debt is important, but it is also important to put on your positivity hat and imagine a scenario where your kids (and you!) are freed of the scourge of educational debt. While you’re at it, add in things like your kid’s first car. Or maybe their wedding, first house, or yes, when they start their own family. It all sounds pretty intimidating, but like any other scary notion, gaining control early on pays off.
Think about the future reward that your simple commitment to start saving will offer to you and your kids. It’s no exaggeration to say that you will be setting them up for a better life. That’s something to be proud of!
Get started. Get real. And get the right support.
OK, you’ve got the future vision in mind, step one is to get going with a savings plan. You’ll want a program that anticipates your needs and requirements as a parent. It should offer decent returns — chances are it will be an investment account — tools to help you track progress, and the flexibility to use the funds you save for a wide range of possible future needs.
Lots of parents assume that a 529 is the right type of savings plan. It may be but be aware that 529s come with serious limitations. For example, parents can only use the savings for education — the savings cannot be used for any other life events. Take the money out early, and you will face severe penalties if you use it for anything other than school fees. For most families, a custodial account like the UNest Investment Account will be a better option.
Now, take a hard look at your current finances. Be brutally realistic about what you can afford to contribute to the plan. The most important thing is to get started and to get into the habit of saving for your kids. Keep re-evaluating, and ideally increase the amount you save each month. After all, the days of diapers will end before you know it, and you will likely free up some disposable income!