Baby’s Piggy Bank

Do you know how much kids cost? I am not talking about babies, but your children, ages 0-24 years old. It did not take me long to start looking at ways to save money and accumulate some wealth for baby when I got pregnant. Well knowing how much a little human being can cost throughout the stages of their life, it was crucial that I start looking at investment accounts of some sort for the the little one. From doctor’s visits, swim lessons, trips, activities, to college, children are expensive (just ask my parents), so let’s debunk the myth that only babies are expensive. ALL CHILDREN at ALL AGES cost money.

So when I started looking, I immediately thought of college first. I was one of those lucky people where my parents paid for college, but you never know where you are going to be in your life when it is time for your children to go off to school, so this is an excellent place to start.

529 College Savings Plan– Not only do these plans grow tax deferred, but they are also tax-free for qualified withdrawals. Yes, they grow at a slow rate (much like a mutual fund that you use for a 401k), but the whole point of these is to start early. In my opinion, 18 years early is never too early. Keep in mind an investor can look into using different states’ plans, depending on what they want to achieve and are not stuck using their own. Just choose a plan, an investment company, a monthly amount you want to contribute, stick to it, increase it, and watch your portfolio grow. I personally went with Merrill Lynch when I was seven months pregnant. You can open a plan under your name and then switch it to the munchkin’s.

Stock Options- If you want to see a larger rate of return in a shorter amount of time, you can always go with stock options. My daughter is six months old and I just started doing this. It is riskier, but if you are liquid and know what stocks you can buy and hold, then you will be fine. Some examples to buy are Amazon, Apple, Alphabet… the list can go and on, but I highly recommend you employee a stock broker or at least use an investment company with basic trading recommendations (such as Merrill Edge).

401K– If you are not contributing to your 401K, do it now. This is your retirement tool, not your child’s college fund. Don’t skimp on those contributions at a 3 or 5% rate, make it hurt. This entails going into your 401K account and physically changing the contribution amount- just do it.

The Old Piggy Bank– You are going to laugh, but much holds true to the saying “Cash is King.” Obviously I am not talking about stuffing $100 bills under your mattress, but keep a savings account for baby. If you are investing in a College Fund for the little one, open up a savings account. The money grandma and grandpa give them on Christmas, the $50 check that was sent for her birthday, as well as any monthly spare change you have, save it. The College Fund won’t cover personal expenses, so if your bigger baby wants to buy a car at 16 and you want to help them, then this is where that savings account comes in.

You will find this funny, but my hubby puts all his spare change in our daughter’s actual piggy bank. I then take it at the end of the month and deposit it in her account. It’s a very cute and fun way to save for your kids, and later on you can teach them the meaning of saving using that same little bank by doing chores or other things that make them well-behaved kids.

 

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Livia’s First Piggy Bank (compliments of my mom)

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