From Crawling to College Funds: How Saving For Your Child’s Future Can Start In Infancy

Congratulations on bringing your biggest- and most expensive- bundle of joy home.

Now comes the fun part: dirty diapers, 3 AM feedings, first words, and yes, even planning for their future. In fact, according to many recent studies, by the time a child reaches adulthood at the age of 18, they will have cost their parents upwards of $250,000- ever before spending a dime on college.


Thankfully, there are effective ways to save for your child’s future that when done correctly- and started early- allow for both the child and parents to have a stress free transition into the next phase of life.

Here are 4 ways to get ahead financially for their futures:

Educational Savings Account

An Educational Savings Account (ESA) is a go to source of financial preparation for parents looking to save money for their child’s future- no matter when that future may be. Unlike other products on the market, ESA’s allow parents to begin using the money during the Kindergarten years, as opposed to waiting until post-secondary education. Additionally, the “qualified expenses” are more loosely defined than other options, allowing the money to be used for things such as Internet packages, necessary technology and books.

The downside to an ESA, however, is the household income restrictions of  $220,000 a year per married couple or less and the $2,000 annual cap for contributions.

529 Plans

Likely one of the more prominent options for college savings specifically, a 529 plan is a state sponsored savings that goes directly towards the expenses associated with obtaining a college education. This is a great option for those that know unequivocally that the money being saved will be used for college related expenses- and nothing else- due to the penalties assessed should this money be spent otherwise. Still, for an option that allows tax free growth and larger annual investments than a ESA, you can’t go wrong with a 529 for your child’s future.


Prepaid Tuition

Within the same vein, these prepaid 529 plans help parents to lock in tuition costs at today’s rates as opposed to the cost at the time of the child’s enrollment. Just like a regular 529, your investment will grow tax free without penalty upon withdrawal as long as the funds are being used for college. Unlike a 529 however- that allows expenses associated with college- prepaid tutions are typically only used for the direct payment of tuition costs.

And while it’s true that prepaid plans are meant to be paid to one school specifically, you will not lose the saved funds should your child decide to go elsewhere. For schools that accept prepaid tuitions, the funds can be easily transferred to the school of your child’s choice without penalty.

Think Outside the Box

Saving money for college isn’t always about taking traditional routes, however. When it comes down to pinching pennies and getting ahead, there are unconventional ideas to keep in mind as well. UPromise by Sallie Mae allows you to get money back on everyday purchases such as groceries, travel and eating out; while other options include the Gerber Life College Plan that though the name commands an expectation to use towards college, allows your child to put the guaranteed funds of $10,000 to $150,000 towards other life expenses once the plan reaches maturity.

No matter which direction you decide on, the most important step is swift action. Waiting until your child is in grade school or later sets them back sometimes tens of thousands of dollars in savings- something that neither you or they should have to experience. With proper planning the years following highschool can be significantly accounted for- if not paid for entirely- just by getting started before they ever take their very first steps.

The sooner you start, the more prepared you will be. Call us today to get started. (985) 792-5232.

Any opinions are those of Paul Snow and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, not is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.