I have two boys…. Cash who will be 5 in November (holy cow I don’t know how that happened) and Caden who will be 2 in December. They don’t know it yet, but their mom and I put away money every month into their 529 education funds. Actually, so do their grandma and grandpa, so do their aunts and uncles, and even their great aunts and uncles for birthdays and Christmas. Take a guess at what we gift my nieces and nephews for birthdays and Christmas. You got it…we contribute to their 529 plans. I guess that’s what you get when you have a dad or uncle who’s a Financial Advisor.
I hear the excuses all the time about why parents or grandparents don’t save for their kids’ or grandkids’ educations. What if they don’t go to college? What if they get a scholarship? What if they get drafted by the Detroit Tigers (that was always my dream growing up and I still wait for that call every year)?
My wife and I like to approach education planning for our boys a bit differently, by accomplishing two objectives at once. Yes, the first goal is to provide an education to our boys so that they have the ability to go out and do whatever they want in this world… Doctor? Great! Engineer? Fantastic! Plumber? Wonderful! Financial Advisor? Even better!
The second objective, and I think it is really the most important part, is educating our boys on the importance of saving, investing, compounding interest, and debt management. Our plan is to have the boys track their 529 plan statements on a monthly or quarterly basis. I want them to buy into the process and really learn the importance of personal finance.
You hear so much talk today about the typical buzz words or headlines: student loans (or student loan forgiveness, but that’s for another conversation), record high consumer debt, out of control inflation, and even the soaring price of education. Do you know how we combat those things? Personal finance education, investing in good stocks and funds, being consistent with our approach, and sticking to our plan even when things don’t look good.
Did you know that part of the Secure 2.0 Act that recently passed is an option to convert 529 funds into ROTH IRAs in the name of the beneficiary? Did you know that you always have the ability to change the beneficiary on a 529 plan if those funds aren’t needed? So many more options are available to consumers now that make the 529 plan much more attractive and beneficial.
Back to our boys…It seems small right? Using education funding to help teach our boys about the importance of personal finance. Teaching them about the power of compounding interest. Do you know what that first bill is going to be to them after they get done with college (hopefully with little to no debt)? It’s going to be an ACH form for them to setup a monthly contribution into their Baird ROTH IRAs.
Give us a call to learn more about education planning and how it all fits into your Financial Plan or visit https://www.sandersmckeewyblenortongroup.bairdwealth.com/.