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TIFFANY'S TAKE: HOW DO I SAVE FOR CHILDREN'S EDUCATION?

investing podcasts Nov 22, 2022

Every Tuesday, Tiffany answers one of your submitted questions. To submit a question for an upcoming episode, visit here: https://www.moneytalkwitht.com/asktiffany

Utah Educational Savings Plan: https://my529.org/

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Transcription:

Episode 163

Intro/Outro: [00:00:00] You know what it is. That's right. It's time to talk money with your money nerd and financial coach. Now tighten those purse strings and open those ears. It's the Money Talk with Tiff podcast.

Tiffany Grant: Hey everyone, and thank you so much for joining me for this episode of Tiffany's Take. In these episodes, I answer your money questions live on the podcast, and today's question is, how do I save for my children's education?

Now, before I get into the answer, I just wanna let you know if you're interested in having your question answered. On the podcast, please go to www.money t.com/x Tiffany, and I'll be more than happy to answer. So let's get into it. So I've actually done quite a few episodes. I went back in the archives and I found at least three where we're talk about College savings and, stacking up for your children's education.

So first look for the episode called Debt Free College Planning with [00:01:00] Shelly Howard. So she went over how you can start planning early for college expenses, like while your child's in middle school and how to look for those opportunities for scholarships. How to look for those opportunities for other types of funding.

And I did another episode like that as well with. Dr. Andrea Johnson and it's called Paying for College. So check out that one as well. I also did one with Sarah Holden, which she went over 5 29 plans. So you can find that one by looking for, saving for your kids is what the episode was called, or just searching these names. searching Sarah Holden.

So I just wanted to direct you to those episodes just because they go more in depth than what I'm gonna cover here. But for the purposes of this episode, as far as how do you save for your children's education, if you know that they're going to go to college and you're looking at saving, I highly suggest a 5 29 plan.

And like I said, that's what me and Sarah had discussed on that episode. And the reason I say that is [00:02:00] because depending on where you live, There are tax benefits for it. If you're in North Carolina, which I know the majority of my listeners are from. Unfortunately, North Carolina does not give us any tax benefits.

But when you, when it comes to 5 29 plans, I actually have one for each of my children open. And the reason I did that is because when I looked at my financial plan and when I'm doing my financial planning, I'm looking at making sure that I have at least a dollar by the time I die. So that means I can get through retirement, I can get through all the other goals leading up to retirement and still have money. Okay?

So when I looked at my plan a few years ago on my birthday, because that's around the time when I typically do that. I noticed that my kids' college education was gonna throw me all the way off to where I had no money. And so I said, I'm gonna make a gift to myself by starting a 5 29 plan for my kids.

So being that North Carolina does not have any benefit, I [00:03:00] went and looked for the best 5 29 plan from any state. And I actually went with Utah. So theirs is, My 5 29 plan.org, if I'm not mistaken. And if I'm wrong, just check the show notes. It'll be the right link there. But , but that's the one that I went with.

And the reason is because they have access to investments that I was most interested in. So from my research, and you can do your own research, matter of fact, highly suggest doing your own research. And also this is not investing advice, . This is just for educational purposes. In my research, I found that Utah and Virginia had the best plans for my purposes.

Like I said, do your research, see what fits you. But I went with the Utah plan. What I love about it is every time my kids get money in Let's say for instance, it's birthday, it's Christmas. People wanna give them money. We save a little bit, we spend a little bit, and we give away a little bit [00:04:00] because it's important to have balance with all three.

Now, when we go in and we save, because my kids said that they wanna go to college . So I'm like, okay, I'm believing y'all. , we're gonna, we go ahead and put some of the money in their investment account, their 5 29. You can depending on the plan, you can invest that money into. Typically they have mutual funds or index funds or target based funds.

So if your child is, let's say five years old, they have an age based investment where you can just. Put it in that particular investment and somebody on the backend does all the work for you, making sure that it goes from very aggressive to, once they get closer to college age, gets a little less aggressive, so on and so forth.

So honestly, that's how I have my kids invested because I don't have time to sit there and go through all of that for all of these different accounts. And so for theirs, I'm like, this will [00:05:00] be the best bet for me. So if you just look at where I started with both of them started with the same amount. My youngest has more because he's been more aggressively invested than my oldest.

So my oldest is 13 now. My youngest is eight. And so as they get closer to college age, they'll start tampering down and make sure that money is safe. So at least I know that's money that I can definitely use for his college. Now, let's say for instance, your child says, you know what? College is not for me.

Which there is nothing wrong with that y'all. So don't pressure your kids into going into college. They don't have to. So if they say, you know what, mom, dad, college is not for me. You can actually reassign those funds to someone else. And so what my plan was, let's say for instance, if my oldest son says, I don't wanna go to college, I'm not gonna force him.

I'm just gonna be like, okay, and I'm gonna move that money over to my youngest son. I'm gonna just name him as the beneficiary. [00:06:00] Now if my youngest son says you know what, mom? I don't think I wanna go to college either. Then you can assign that beneficiary as anyone as you want. If I wanted to use it for my education, let's say I wanted to go back and get my PhD or get my whatever, I can use that money for myself too.

And so it's not that the money is stuck, there's actually ways you can move it around. And so that's why I felt like that was a great option for us. And I even thought about you know my little sister, if she needs to go. And my kids decide they don't want to, I can make her the beneficiary. If she has kids, then I can make them the beneficiary, so on and so forth.

So the money is not stuck with that one person. And I know that's a common question that I get. And so that's why I decided on the 5 29 plan. I feel like it was the best route for me. But there are other options which I believe me and Sarah went over in the episode. So definitely check out the saving for your kids with Sarah Holden episode because it goes [00:07:00] into more depth, but that is how you can start saving for your kids.

And then also, and I can only speak for the Utah plan cause this is the only one that I'm familiar with. If you want family and friends to put money in there on behalf of your kids, you just send them a quick link. Okay, you all can put money here. And then they go through the process by themselves taking you completely out of it, which is awesome for me because I don't wanna be the hold up

And so there are different ways that other people can actually invest in your children as well. And so just keep that top of mind too. With the five to nine plans. So that will be my answer for that question. If you have any questions, like I said, go to www.money talkwithT .com /askTiffany and I'll be more than happy to answer for you.

Bye.

Intro/Outro: Thank you for listening, joining and being a part of the Money Talk with Tiff podcast this week. You can check Tiff Out every Thursday for a [00:08:00] New Money Talk podcast, but if you just can't wait until next week, you can listen to previous. Podcast episodes at Money Talk with t.com or follow TIFF on all social media platforms at Money Talk with T until next time.

Spend wise, by spending less than you make a word to the money wise is always sufficient.

 

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