A little-known fact about me? I'm not a huge fan of baby showers. I know, I teach prenatal yoga. Yes, I get invited to a lot of baby showers. And yes, I go. But while everyone else is cooing over the frilly clothes or decorative wall hangings, I'm thinking about baby's future.
You see, in a previous life I worked in college admissions. I've spoken with thousands of families who wondered where they would get the money to send their teenager to college. Some opted to take out a plus loan, or a second mortgage on their house. Others hoped that athletic talents would win their student a free or discounted education. A handful (truly, a small handful) knew with great confidence that their student would have access to whichever education they wanted because they had been saving for it from the beginning. I'm not talking about the independently wealthy, but families with modest incomes, like teachers, nurses, and public servants, who had socked money away starting when their child was born.
Maybe you're not a saver, or don't know much about how money works in this world. But this is an amazing opportunity to learn and to take advantage of the many different ways you can start funding your baby's education starting now. For some people, a 529 plan is the right choice. For others, a Coverdell Education Savings Plan. There are many options you should discuss with your partner and possibly a financial advisor. Even a simple savings account in your child's name is better than nothing, because it will get you saving.
Tips for Saving for Baby
1. Include a college fund on your registry. Let shower attendees know that you'll have a container to receive cash gifts that will go towards baby's future education costs. Let attendees know that they will have the opportunity to take pride when baby goes to school, rather than just when they see the crib skirt they purchased.
2. Commit to an annual contribution to baby's account as a gift from you or you and your partner. Invite grandparents and others to contribute as well. A smaller toy/book gift will be just as meaningful (kids usually prefer playing with the box anyway).
3. Learn more about how money works. It's a shame so many Americans graduate from high school with almost no understanding of how to save, spend, invest, and how to manage debt. Make sure YOU teach your baby the ways of the financial world.
4. Avoid the Curse of the Trustafarian. A lot of children who enter college with a savings account feel entitled to spend it however they choose (usually on beer). Regardless of the size of the account, strongly consider having the child take out a student loan in her name. This will keep her accountable for her own education, encourage her to pursue her passions (rather than taking the classes she thinks you want her to take), and encourage her to use all of those financial lessons you taught her over the years.
I'm one of those people who loves making your life easier (and I believe in you). I am an experienced registered prenatal yoga teacher and a lactation educator.
Want more? My monthly newsletter might be for you.