Not long after Madeline was born, Mike and I were thinking about all of the expenses that would be incurred over her life, not the least of which is college. Having both had student loans, we really felt like we’d like to be able to afford to send Madeline to college and not saddle her with the burden of student loan debt as she starts out her adult life. That being said, this is easier said than done! Particularly with the rising costs of higher education in our country. We didn’t want her to feel like she either needed to qualify for scholarships or take out student loans, so we came up with a unique plan to start saving for her.
New York State, where we live, has some great savings programs when it comes to college. We chose to open a 529 account for her, these are account that most states sponsor (so if you’re interested check your state’s websites for more information). The beauty of this is that the money you put in is not only a tax deduction for you (wahoo!), but also not subject to income tax when it’s withdrawn in the future (for qualified expenses). Once you’ve opened your account in your child’s name, you can then start to deposit money and invest it so that it (hopefully) grows. *It is important to know, there is a management charge for these types of accounts, in New York State it’s $1.60/year for every $1000 you invest.
Like anything else, you can defer pre-tax money in your paychecks to this account. I however, chose a different path for the first year of Madeline’s life. Having a baby comes with a lot of expenses (you certainly don’t need us to tell you that!) Between diapers, doctors appointments, formula, daycare, clothes, etc. it can certainly add up quickly. So the idea of deferring additional money from our weekly checks into this account just wasn’t going to work in our budget. Then, I had a thought (that I thought was genius)!
One of the ways in which I keep costs down in our family is through couponing. As you’ve seen with our diaper stockpile post, we’ve found a lot of ways to coupon and save money. One of the biggest ways that I coupon is through different cash back apps including (but not limited to!) Ebates, Savingstar, Ibotta, Checkout51, and Find&Save. All of these are mobile apps that pay you cash back for purchasing specific items or at specific stores. Prior to Madeline’s arrival, I always just sent the deposits to my bank account, and because they come in various increments, sometimes as small as $5, typically I spent them without thinking twice about it. That’s when this plan really came to fruition. Instead of depositing them into my checking account- I started to deposit them into a separate savings account for Madeline. I didn’t miss them in my checking account because I never counted on them anyway. After two weeks of testing this, I was surprised to find that I had accumulated just shy of $86 into her savings account. So now, monthly, I deposit that savings into her NY 529 account and invest it. It’s a small way to start saving for her, without putting a strain on our budget, we don’t even notice we’re doing it!
Do you have creative ways to save for your little ones? We want to hear about them!