Question

I’ll be debt free this year a few months before my 25th birthday. Those who don’t have a desire to become a homeowner what do you do with the extra money you’ll have monthly? I really been sitting here thinking so deeply about this. Note I do have two children. They are 7 & 1 (don’t want anymore AT ALL) . I will be opening both my kids up a 529 college fund but honestly don’t know how much should I contribute to them monthly? Yearly? Those of you who have one can you give me some insight? (Yes , I know this will vary from person to person) I save $100 monthly per kid from birth, so $1200 yearly each child. By their 18th birthday they’ll roughly have $21, 000 each. ( My family says it’s too much ? That I’m going to teach them they don’t have to work for anything since I’m saving this money for them!? ) For myself, the goal is to max out my IRA Roth Account after becoming debt free. This is all I really have planned , I don’t really know what else to consider !? Oooh and our Walt Disney trip for December of 2022. Which I started putting aside $250 this month till then monthly .  

Answer 1

First, by the time your kids are 18, $21k probably won't be worth much (I mean, we see how far $1k gets people). Second, I wouldn't save in a 529 plan, because you don't know if your kids WILL go to college. My husband and I invest for our daughter and have a "trust fund". She can't touch it until she's 18, 21, and 25. $5k at 18, $15k at 21, and the rest at 25. If you don't want a home, time to invest in stocks/bonds and prepare for retirement!  

Comments

@alcaraz63006 exactly what I said ! Phones are more than 1k ‍♀️ I did do some research and made some calls and was told that if the child doesn’t use to find for college , I would be penalized 10% off the interest accrued. I never thought about trust ! I need to look into this. I will be maxing out my retirement account yearly ☺️

Answer 2

If you make sure they either use it for college or for a car once they're 18 or half and half that way they know how to work for things. They can get jobs at the age of 16 and put in money for their car as well. My parents couldn't help me out but trust me they made me work for everything even though they let me stay at home for free up until 4 years ago I'm 25 currently in graduate school.  

Comments

@mastership yes ! This is exactly what I was thinking ! Unfortunately, I wasn’t raised by my parent and my granny passed when I was 16. I had to work extremely hard especially having a child at 17. I will definitely teach my kids the value of working for things yourself ! I just want to give them a jump start ☺️

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@chu20 yes ma'am a jump start means they won't struggle as much as we did!  

Answer 3

Look into doing cd’s for them too to build on the funds.  

Comments

@benil I will check this out ! Thank you  

Answer 4

College is very expensive. Put it in trust accounts for them.  

Comments

@oh830 Yes I seen the numbers they are outrageous! I will look into trust funds ☺️

Answer 5

As someone who had absolutely NO help other than student loans for college, $21, 000 is not too much, i have about $29k in student debt. What I would do is get them to apply for a ton of scholarships first, don’t tell them you have the money saved up but pay the tuition and whatever is left at the end, give it to them for graduation so they can have a jump start in life. I’ve always had to work for everything I have but I wish my parents had put back money when I was a kid to help with it. It doesn’t teach your kid not to work, it just helps them to get ahead in life. Teach them to work as they grow up too, that doesn’t just start in college.  

Comments

@mayer I’m right there with you minus the student loans . I went into the foster care system at 16 pregnant with my 1st child. Not only having to pave the way for myself but for my child at the time was overwhelming & dam right hard ! But we survived. It would have been great to have that jump start as you said . Which I why I want to provide that for my children. I definitely will teach them the importance and values of working for yourself of course .  

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Also, encourage them to do their core classes at a local community college and then transfer to their #1 school for their major. Community colleges are so much cheaper and most of them don’t have housing fees. So your kid would be home with you unless they move out but it would help them tremendously.  

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@chu20 that’s what my husband and I are planning on doing. We’re on schedule to pay off both of our debts by September of next year & then from there we’re putting money into two savings accounts, one for our future kiddos (we don’t have any yet) and one for an emergency fund for us.  

Answer 6

1. Set aside at least 6-8 months worth of expenses in your emergency fund. 2. Set up life insurance, will and a trust. 3. Set up retirement accounts if you haven't already. Contribute enough to get your employer match. Then, max out your Roth IRA. Then, save for your children's future needs. You might want to save for summer camps, first car or sports.