Saving for Our Kids

As parents, it’s natural to want to give our kids every possible advantage. We think about their education, their opportunities, their future. But here’s something that may surprise you: the best gift you can give your child is your own financial stability.

Before you save for your kids, make sure you’re on track for your own retirement.

That may sound selfish, but it’s really the opposite. If you don’t have enough saved for retirement, your kids may end up supporting you later — or you may find yourself dipping into their education fund just to make ends meet.

Once you’ve got your foundation in place, then yes, yes, YES — saving for your kids is a powerful and generous next step.

College Is Just One Part of the Picture

Most people immediately jump to the 529 plan when they think about saving for their kids. And for good reason — it is a great tool (and I’ll get into the details in an upcoming post). But it’s also somewhat narrow in scope. A 529 is designed for qualified education expenses, which means it’s not flexible if your child doesn’t go to college, gets scholarships, or wants to use the money for something else entirely — like launching a business, traveling, or buying a first home.

And while Congress did add some flexibility to the 529 plan — starting in 2024, you can rollover up to $35,000 from a leftover 529 into your child’s Roth IRA — there are some complicated rules around that rollover. I suggest you discuss with your advisor and your CPA before planning on this route.

Anything beyond the $35,000 Roth rollover could be subject to taxes and a 10% penalty if used for non-qualified expenses.

So yes, a 529 is helpful — but is not the only way.

Think About Broader Goals, Not Just Tuition

Maybe you want to help your child:

• Buy their first car

• Pay for a gap year abroad

• Start a business after high school

• Contribute to a wedding or home down payment

• Cover therapy or other health-related expenses

These kinds of goals aren’t covered by 529 plans, but a custodial account (UGMA/UTMA) or even keeping money in your own investment account (earmarked for them) could offer more flexibility.

Yes, there are trade-offs — including taxes and eventual control shifting to your child at age of majority — but it all depends on what you value most: growth potential, tax efficiency or control.

Start with a Plan, Not Just a Product

Rather than asking “Should I open a 529?” or “What’s the best savings account for my kid?”, the more apt question is: What do I want this money to do?

Clarity on the why will lead you to the right how.