“The secret to creating lasting financial change is to decide to pay yourself first and then make it automatic.” – David Bach
David Bach has a point, and his point holds true for saving and investing for our kids. At UNest, we believe that the most important step to beginning the journey to saving for your children’s future starts with making it automatic. That is why we allow our customers to begin saving with as little as $25 per month. Do we believe that $25 a month will be sufficient to pay for your children’s tuition, books room and board? No, it most certainly will not. However, building the habit of saving every month for your children is an important step in the process. It is also an important skill to teach your children and show them how investment compounds over time and creates lasting wealth.
Automating your savings is one of the easiest ways to save even more and reach your savings goals, but what does it mean to automate your savings, exactly? You, the contributor, will make automatic and fixed amount deposits at specified periods into an account. Every time you receive a paycheck, you can set a designated amount automatically transferred to your accounts. Automating your savings is not only convenient but can also help with budgeting and managing your spending habits. Automating your savings also helps take the emotion out of investing in a plan or portfolio that can increase or decrease depending on the market performance.
Below are our list of best practices for setting and achieving your family’s savings goals. No matter what, remember that taking action and opening a UNest account will positively impact your children’s future.
- Define what success looks like. Goals will be different for every parent. Some will want to have enough to pay for Stanford Medical School, while others will be content being able to pay for a 2 year state school. In some cases parents will use their UTMA savings to pay for their children’s first car or a downpayment on their house! There are many calculators available to help you determine the amount of time and money you are willing to contribute what can be accomplished. The key here is to remember that all of our finances are fluid. While the goal may seem insurmountable today, defining what success means will place a target that you can begin making strides towards.
- Evaluate your finances: Can you go without Starbucks and save $3 a day for your kids’ future? If so you will be astounded at what can be accomplished over the course of 18 years. Ensure that you continuously reevaluate your finances to ensure your contributions are in line with your finances.
- Start Saving: No matter what if you have kids you need to have a 529 account. The sooner you can establish one and begin saving the better. Even if you are only contributing $25 a month you are taking a positive step towards your children’s financial future and building the foundation.
- Consistency: Warren Buffet didn’t become the wealthiest person in the world by changing up his practices. He discovered value investing and practiced it
- According to a recent survey of about 1,000 parents from T. Rowe Price, 53% of respondents said saving for college is a higher priority than saving for retirement.