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Home › Articles › Saving Money › For a Rainy Day and Beyond

For a Rainy Day and Beyond

Start Saving Before Baby Arrives

By Gina Roberts-Grey

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  • 529 college plans do not have nearly as many restrictions as traditional IRA accounts and offer a limit of up to $250,000 per beneficiary. Anyone can contribute to or open a 529, and they create excellent options for well wishing family members who want to contribute to a child's educational needs. These accounts can be transferred from one individual to another, creating the opportunity for a parent to open an account in a co-parent's name and transfer the account to a child after he or she is born. If a child does not attend college or leaves a balance in his 529, you can transfer the balance to a sibling, grandchild, etc.
  • Several states such as Alabama and Mississippi offer residents another interesting savings alternative. Purchasing Prepaid Affordable College Tuition (PACT) contracts can provide for children to attend state colleges and universities.

    • "Regardless of which savings plan best suits your family, it is imperative to understand it is never too early to begin," Muehlfelder says. Sabo agrees. "With the variety of choices available, and the rising costs of raising children, starting to save before having a new family is as important as baby proofing your home or organizing a nursery before bringing your baby home!" he says.

    Additional Savings Considerations
    • Increase your medical flexible spending payroll deduction to offset the costs of pregnancy, delivery and well baby visits.
    • Consistently review your 401(k) funds to maximize your return.

    Adjust your payroll exemptions as soon as your child is born.

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