We are experiencing a trend in savings shaming these days, especially when it comes to millennials and their lattes. Thankfully, people are starting to stand up to this condescending and typically mathematically incorrect financial advice (tipping our caps to Ellevest). At Scholar Raise, we're starting to see this trend spill over into parents, too. "Don't buy the onesie...Don't buy the toy...Don't buy the stuffed animal." We hear companies telling parents to repurpose their consumerism so that they can save for their child's future instead.
Are you kidding me? My kid can easily go through 5 outfit changes a day thanks to her 4-month-old digestive system. In fact, I just took a break while writing this to change a diaper and outfit...and now a second outfit. Besides the need for keeping my kid out of poopy clothing, I can't tell you how much joy our friends and family get out of seeing our daughter cuddling a lovey or exploring a toy they gifted her.
That's why we say, "Get the onesie!" On top of truly needing a lot clothing and toys that help our children's healthy development, sometimes we enjoy those items ourselves as they can bring a brief moment of lightness and warmth. It's one of the fun parts of having a baby, when there's a lot of stressful things going on. We have enough mommy guilt with the pressures around birthing, breastfeeding and sleep training, we don't need one more thing to be shamed for.
So drop the guilt and get that adorable magnetic onesie that makes night time changes easier. Your child won't miss out on college because of it.
While we're talking about college, this is 2019 and we've been dealt a difficult hand when it comes to the cost of higher education. This is a new problem that most of our parents didn't have to face. Because it's so new, we need a modern solution. Unfortunately, your typical savings account isn't going to get you across the tuition finish line with their less than 1% interest rate, but there are ways to better prepare. Here's what I've learned along the way...
- Ditch the savings account. At best, they have a 1% interest rate which isn't doing you any favors. It's also way too tempting to withdraw money when the perceived need arises.
- Save the index funds for other investments. Keep in mind that when you take money out of an index fund, you will be taxed on the earnings.
- Consider a 529. This is a state-run college savings plan that has better performance than a savings account (we're talking 6x better), allows for tax-free earnings and withdrawals, and has the least impact on financial aid eligibility (unlike a savings account or other investments).
- Save early & often. Setting up recurring deposits into your college savings plan is just as important as setting up your recurring deposits to your 401k. Remember that glorious term "compounding returns." It has a far better ring to it than "compounding debt."
- Get others involved. The people who are buying you the onesie and the toy are also likely to contribute to your kid's college fund, when given the opportunity. In fact, gift contributions to 529 plans managed by Ascensus increased by 45% in 2018 and were up 126% from 2016!
Maybe we can't prevent the unpredictable cost of education, but we can help make it easier to handle by reducing the amount of student debt our kids take on. That's why we started Scholar Raise: because we want saving for college to be accessible, easy and efficient. We make it easy to sign-up for a 529 in just 3 easy steps and involve your community to contribute. Our hope is that more parents will feel supported in this journey towards higher education while feeling less guilt about the onesie.
Scholar Raise. Save for college the smart way. #BuyTheOnesie
Ashley Byrne
Proud Mama to Madeline
