The Pot of Gold: 3 Money-Smart Tips for New Parents

On St. Patrick’s Day, who isn’t looking for a pot of gold? I hope this post helps you find it.

College Comes Quickly – 529 plans and Coverdell Education Savings Accounts are a great way to save for college and grow your money tax-deferred. It may be hard to fathom, but your little one will be going to college sooner than you think, and tuition costs are rising fast. 529 contributions are unlimited but can only be used for college expenses. The withdrawals are also tax-free when used properly (i.e., paying for college expenses). It also looks likely that computer expenses will soon be covered again like they were in 2010. Coverdell funds are another option. They are capped at $2,000 per year, but they can be used for elementary and secondary schools too. Either way, the money can add up when you start early. Most states offer at least one 529 plan, and you may be able to invest in either at your own financial institution. Check with your institution or your tax professional; they can help you find the saving solutions that will work best for your family.

“529 contributions are unlimited but can only be used for college expenses.”

Put Your Finances on Autopilot – Parents with young children have one thing in common: a lack of time. Make things easier on yourself, and simplify your finances by putting them on autopilot. Set electronic transfers for paychecks and online bill pay for as many routine bills as possible. And while you’re at it, why not add your little one’s “monthly savings” deduction to that list too?

“Ask yourself whether the product existed a few years ago or when you were a baby.”

Slow the Spending – With so many new products marketed to parents, it can be tempting to spend on unnecessary things. Ask yourself whether the product existed a few years ago or when you were a baby. New products and gadgets may be appealing, but they probably aren’t essential either. And don’t forget that little ones aren’t aware of the best clothes, best birthday parties or best toys (yet)! Take advantage of this, and put aside money for safe investments such as savings accounts.

Of course, always remember our disclaimer.