Doing This Before Your Kid Turns 4 Could Add an Extra $25K to Their College Fund
When it comes to your kid’s college savings fund, you probably feel like you’re not doing enough. A lot of parents feel the same way, and they’re worried their child will be burdened with student-loan debt like they had (or might still have).
That’s why it’s important to save early. The sooner you start, the more you’ll save, especially if you use a tax-advantaged savings plan. It can grow your money a whole lot faster than a regular ol‘ savings account.
Luckily, an app called UNest can help you start saving right now. Better yet: It could help you save an extra $25,000 for your kid’s college — without you contributing a penny more.
How This App Could Help You Stash Away An Extra $25K
Traditionally, taking advantage of a savings plan like this was complicated — and expensive. You could either go to your state’s website and fill out a lengthy application process, or reach out to a financial advisor, which means you’d be eating into your returns to pay the advisory commissions.
But with UNest, you can open a custodial account in five minutes from your phone. It costs just $3 a month — no complicated fee structures, no lengthy paperwork, no in-depth research required. And UNest is a registered financial advisor, so you know it’s trustworthy.
We used its calculator to estimate some savings:
Let’s say your kid is 4 years old, and you contribute $250 a month through UNest. By the time your kid is 18, you could have more than $68,000 stashed away, ready to use for college or trade school tuition, housing, books and/or a new computer.
That’s $25,000 more than you’d have if you kept it in a savings account, which would have about $43,000 in it.
Traditionally, you can only use these types of plans for education costs, or you’ll pay a fee. But with UNest, your kid can use the savings for not just college, but also for other major life milestones, like a first car, a down payment on a house or a wedding.
One of our favorite UNest features is the ability to invite friends and family to contribute to your kid’s investment plan for birthdays, holidays and other special occasions. It’s super easy to use, and those gifts will continue to grow in value, thanks to years of compound interest.
To get started, just download the UNest app. Then you’ll fill out some basic information and let UNest pick the best savings plan based on your child’s age and the money they’ll need.
From there, it costs just $3 a month, and you’ll set up your monthly deposits; you can start with as little as $25 a month. Your portfolio adjusts as the market changes, so you can truly set it and forget it.
And, hey, by taking just five minutes to do this, you could be saving an extra $25,000 for your kid’s education, thanks to those sweet tax advantages and returns. Not bad, right?
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder.