CONSUMER
Tips for parents building a financial foundation
Apr 26, 2023, 9:54 AM | Updated: 2:22 pm
SALT LAKE CITY — Raising kids can be expensive. In today’s “Save more, worry less,” KSL’s Tamara Vaifanua looks at the ways parents with young kids, or soon to be parents, can establish a financial foundation.
There’s a lot to figure out. What’s the best way to save for college? What type of savings account should I use?
Here are four steps to get you started, according to CNBC:
Save for future education costs by starting a 529 plan for your kid.
The investments grow tax-free, and withdrawals are also tax-free if used for qualified expenses such as books, computers, room, and board.
In Utah, there’s no minimum contribution to open an account; you can contribute up to $540,000.
Invest on your child’s behalf
There are accounts you can set up in the name of your child and control until they become adults. From there, they can use the money however they choose.
If you don’t have a will, you should consider getting one
The legal document spells out what will happen to your belongings and assets when you die.
There’s a guardianship clause in wills that lays out a parent’s wishes about who will have physical custody of their children if anything happens to them.
If both parents pass away early, and there’s no living guardian, the state or court will generally decide what happens to the child.
Use a dependent care flexible use spending account
Through your employer, you can set aside money on a pre-tax basis to help pay for out-of-pocket expenses, such as day care, after school programs and summer day camps.
Financial advisors suggest parents teach their kids to set aside money for themselves, talk about savings and use apps that can help them establish some healthy habits.