As a parent, you have the incredible responsibility of giving your children their best chance, to help prepare them for the “real world” in any way you can. Invaluable life lessons are the best tool, but money is a close second.
College is expensive, and most students will graduate with thousands of dollars to repay. This may even discourage them from attending college all together. But with accounts like the Hartford Smart529 fund, your children can graduate debt free. My great grandfather opened up a mutual fund with Hartford before I was even born. Over 18 years worth of interest return later, I was able to pay four years of college tuition, study abroad, and have extra left over to travel. Because my great grandfather invested inmy future, I’m financially secure now.
The Hartford Smart529 mutual fund was extremely beneficial to me. Specifically meant for college expenses, each withdrawal had to be considered “qualified”. That includes tuition, room and board, meal plans, rent, technology, or anything else justifiably school related. If the withdrawal isn’t qualified, then at least 10% will be taxed, on top of possible income taxes. But if you know your child will be attending college, help them to avoid loans by investingnow. Time allows these accounts to grow to substantial amounts, so start early. The account owners have a lot of control over these mutual funds, and can contribute up to an additional 14 thousand per year. Think about it next time your child is begging you to take them to the toy store. What will benefit them more, a toy they’ll outgrow or paid-for education?
My grandmother was also invested in my future. Years before I even graduated high school, she opened up two CDs (certificates of deposit). The first allowed me to purchase a car without taking out a loan. I still drive that car! And right before I studied abroad, the second matured, and I used that money to frolic through Europe, without having to drain my own savings. Although CDs are famous for having laughably low interest rates, they will never be anything less than what was deposited. Think of it as an untouchable savings account, and the recipient could put the money toward anything they may need. Perhaps a down payment for a first condo, or business start up costs, or maybe just into a personal savings to start a new life. Either way, the money you so graciously set aside for your children right now will make a difference in their financial future.
Things like CDs and savings bonds have “maturity dates,” meaning that you cannot withdraw from them without a fee until a specific amount of time has passed. If you are really patient, consider Series EE savings bonds. My father bought ten of them for me the year I was born. Every six months the interest amount changes on these types of bonds, and when I turned 20 the interest doubled, and continues to change twice a year. These bonds stop earning interest after 30 years, and will be worth substantially more than their face value. If you go the savings bonds route, be sure to note that they cannot be cashed in within 12 months of purchase, and even then you’ll barely have earned back a dollar. If your child has outstanding, creative dreams for their life, invest in those dreams when their young. That way, as the years pass, they will continue to get support from you, even in the distant future.
I was beyond fortunate and thankful for the graciousness of my family. Without their help, if they had never thought about me and my future, I wouldn’t be where I am today. I am not a mother yet, but I already opened a college fund because I want my child to have the same opportunities I did. Give your children their best chance by securing their financial freedom while they are young, or not even around yet! It’s certainly never too early to invest in the future.