How saving for college can fit into your life as a new mom
They say life changes when you become a mother. And in so many ways, it’s true. Your body, your family, and your perspective on the world will never be the same. Being a parent comes with its ups and downs, but for all the sleepless nights, each day you get to hold the most precious thing you have ever known.
Remaining positive isn’t always easy. Especially when it comes to missing out on activities that were a regular part of your life before the baby. But what if foregoing those activities (whatever they may have been!) could have an important silver lining? Allow me to explain.
Silver lining savings
Let’s say that you would have a girls’ night out every week before your baby was born. But since then, you’re only able to meet up with your girlfriends twice a month. While this can be a tough adjustment for new moms, there’s a definite silver lining. What if the money you saved by not attending 2 dinners was instead invested in a college savings plan?
Opening a tax-advantaged 529 investment account (think of it like a retirement account but for college savings) can help your savings grow, and the extra time you’re spending taking care of your child can turn into an invaluable gift – a debt-free (or nearly debt-free!) college education.
Used aggressively, a 529 plan can help pay for the full cost of college. But even a small (and regular!) contribution to a 529 plan can help you save up to ⅓ of the projected cost of college by leveraging the power of compound interest. The remaining cost can be covered by scholarships, financial aid, or your child’s own contributions through part-time work or summer jobs.
Investing in a 529 plan
As an example, if you invest $100 per month into a 529 plan for 18 years, your total contribution of roughly $21,600 could more than double, to approximately $45,000. This would cover about 20% of the projected $210,600 cost of attending a public in-state university in 2034, or 60% of your goal.
Compound interest works by reinvesting earnings on your initial investment over a period of time. So the more you invest over a long period of time, the higher your return.
It’s hard to know when to start saving for college, but maybe beginning to invest in your child’s future can fit nicely alongside all of the other changes that have happened in your life.
There truly is a silver lining for every difficulty associated with being a new mom, and with the right perspective, there is no challenge you can’t tackle. You’ve got this mama!
