Awww yeahhhhhh! Go Baby $ Go Baby $ Go! Or is he Baby J. now? I dunno… Either way, he’s a baby with over $3,000 to his name now! ;) He just opened up his first two financial accounts and I can tell by the way he’s looking at me now that he’s feeling pretty good about it, haha…
1st Account: Savings – $605.01
We had been collecting a few checks that people have sent over when he was born, and it only recently occurred to me that we couldn’t cash them! We have no accounts with the baby’s name on it, haha… Oops. It never crossed my mind until I sat down to deposit them (which is kinda weird, really). But we cleared that up real fast with a quick call to USAA, naturally, and 3 minutes later he had his first official account – Woohoo!
$350 of it came from my winnings of Ramit’s $1,000 Giveaway the other month (I was going to put it into Baby J’s college account, but decided to *match* it instead. Something I’m thinking of doing in the future when he’s old enough to start being taught about money :)), and the rest from friends and family. Not too bad for a 4-month old! That’s more than a lot of people keep in savings unfortunately :(
2nd Account: A College Savings 529 Plan – $2,500.00
I finally decided to make a decision one way or the other with saving for his college, and we went with our state’s 529 plan because they allow you to deduct up to $2,500 a year of what you put in! Which is FREE money right off the bat – making our decision much easier in the end :)
I had originally thought we’d just open one up with USAA so I could have everything in one spot which I thoroughly enjoy, but it turns out you have to do it with whatever financial institution the State has set it up with. Which unfortunately is not USAA… But that’s fine, the money saved with taxes totally makes up for it. At least for as long as we live here (once/if we move, I’ll then see what *that* state offers and if it’s equally good I’ll just roll it all over into a new one with them. And if it sucks, I’ll then go with USAA until/if w move again… No point in throwing away free and EASY money, right?)
And then once we decided on opening the account, it was hard of course to *only* put in the $350 I had initially set aside for it (that same one from Ramit’s Giveaway I won), so we just said “F it” and poured the full $2,500 into it so that we can max out those tax benefits for the 2012 year. It’s just SO HARD to pass up deals like that! Especially since we have the money sitting there in our Savings just doing nothing… It would be a different story if we didn’t have those reserves and another great reminder of how cash gives you OPTIONS later! It may sit there waiting for opportunities for a little time, but then when you’re ready to move you can just jump right in and work it :)
So Baby Money starts his life out with a few grand to his name! We’ll probably end up doing automatic deposits of $200/mo starting in 2013 to hit our $2,500 goal going forward as well. It’s not the $400/mo or so that “professionals” recommend (ya know, cuz college will be like $3 Billion dollars for everyone then), but it’s a good enough start for now… Maybe we’ll get lucky and our investments will return 15%+ a year to make up for it ;)
Oh, and speaking of which, I just chose one of those Target Date funds for now where all the money will be going… I thought of picking one of the more aggressive stocks-only plans, but I know the wife would worry about it too much so we’re going the more safer route instead ;) Only time will tell if it worked! (And we can change it once a year if we decide to too, which is nice)
Now a question for you: Should we include this in *our* Net Worth updates going forward? Or no?
I know this post is all about the baby having his own net worth and all that, haha, but I’m wondering if it makes sense to still keep it in ours instead? Since really it’s our money that’s allocated to him for later use? (Except for gifts that were directly for him, of course)
I guess it wouldn’t be the end of the world to start tacking two net worths going forward, but I just can’t tell which side makes the most sense anymore… I mean, if he never uses the college money for whatever reason, wouldn’t it still be OURS? To either give to someone else or cash in and take the penalty hits? My brain hurts from thinking about it… Curious to see what YOU would do.
Thanks guys! All uncharted territory for us.
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In other news: I still need to update our baby’s money tracker for the last couple of months. Sorry to all those asking me about it! Turns out it’s a lot harder to stay on top of than I thought :( At least right now while I’m a stay-at-home dad two days a week, but I’ll try and be better about it! It really is one of my favorite “trackers” I’ve done in a while…
PS: If you’re just getting started in your journey, here are a few good resources to help track your money. Doesn’t matter which route you go, just that it ends up sticking!
- The "Budget/Net Worth" spreadsheet - the colorful Excel template I personally use.
- The "Money Snapshot" spreadsheet - a simple Excel template I created for my former $$$ clients
If you're not a spreadsheet guy like me and prefer something more automated (which is fine, whatever gets you to take action!), you can try your hand with a free Empower account instead (formerly Personal Capital)
Empower is a cool tool that connects with your bank & investment accounts to give you an automated way to track your net worth. You'll get a crystal clear picture of how your spending and investments affect your financial goals (early retirement?), and it's super easy to use.
It only takes a couple minutes to set up and you can grab your free account here. They also do a lot of other cool stuff as well which my early retired friend Justin covers in our full review of Empower - check it out here: Why I Use Empower Almost Every Single Day.
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I say don’t include it. It is already spent (on college) or will be given to the baby if not so it will never be your money again… just my two cents.
Tough call J; for us we have included our little girl’s savings (but not college fund) for the family net worth update. I guess my feeling is that it’s a way to include her with the family money meeting ;)
When we do our net worth reviews and talk about account balances it seemed kind of cool that our little one had our own little stash.
She’s too young now, but I think it would be great to show her how her little balance has grown over the years.
I say include it, since technically the 529 plan is your money he is just the beneficiary. If he doesn’t go to school it is yours to take out and take the hit on the gains…
Hmmm I don’t know, maybe don’t include it? And yay I’m glad your baby has a net worth :)
I would include it in your net worth. Otherwise contributing to Baby J’s college fund would have a negative affect on your net worth and would look more like an expenditure rather then savings.
I am of the opinion not to use it since as soon as baby $ goes to college(or if) your net worth will start decreasing rapidly. Better to not have the pressure of decreasing net worth later on and that money isnt exactly something you ever plan on using for your own personal use even if it ends up that way.
I say include it, maybe as a sub-total type thing?
I wouldn’t include it in your net worth.
Honestly J, I’d have to say don’t include it. It isn’t your money anymore, it’s Baby J’s. I know that the 529 is TECHNICALLY yours but even then, I’d look at it as an expenditure. You’re paying for college with it, so it’s already gone. If, someday, Baby J doesn’t go to school and you get the money back then you have a nice little windfall! But until then, I don’t think it’s your money to claim :)
I vote with Brian! Don’t include it…unless your evil master plan is to shelter it in his name and then nefariously swipe it back at the last minute. …totally illegal (and probably immoral) but it wears well with the evil laugh you’ve taught Baby J……
Our daughters are 35 (MBA) and 32 (Atty). They went to state schools (North Carolina) for undergrad and we footed the bills. They went on to pay their own graduate school bills, with loans. It was expected that they would go on to higher learning. My opinion is that it is an excellent idea to start immediately to put money away for college or to turn 18 and have a lump sum. Maybe tie up the lump sum so they have a cushion at 25 or so to start a business or put a down payment on a home. But it is is part of your family wealth now and you will be paying their bills for karate school, swimming lessons, backpacking through Europe, lots of other hair raising stuff that you will (Ihope) want them to have. You are going to live a lot of your lives before they leave for college. It may take a village, but it takes a lot of cash to do the best you can for your kids. What you are saving is part of your wealth to make choices about as you move through your lives. We always considered it family wealth, even though we intend to use it all up and leave them with bills at the end. Think through every financial move in two ways, immediate and a few years onward but also the implications for your retirement and ending. And if I were really advising kids about school, I would say live at home and earn most of the money for college while you are taking classes at a community college. Then take your last two years at a good state school. Try hard not to go into heavy debt and if you do, borrow from family. In my opinion, the government should not be working out loans for college unless they make it optional to pay back. You cannot educate teachers to start and stay in teaching and burden them with a 60K debt to pay back. Thanks for letting me vent!
We don’t include our kids’ savings accounts (or their piggy banks!) in our net worth, but we do include the 529s. We figure the difference is that the savings accounts are theirs — gift money, but the 529s are ours — money we are setting aside to pay for their college expenses. We consider them adjunct to our savings accounts (albeit earmarked for a special purpose).
No, it’s not part of your worth. The only time I look at it from that perspective is when Jane and I are doing the great retrospective. Where we were 14 years ago when J2 was born till now. The $200K we sacked away to fund J2’s college doesn’t appear on our sheet, but when looking at how much we spent/saved, it’s money not “spent/wasted” but more important, it was a regular budget item we don’t carry through to retirement.
Congrats on opening saving accounts for your boy. I too opened separate savings account for my girls. Opened with ING off of mine (sub accounts) Made it easy to maintain and monitor. We also have 529 accounts for girls. Have online US Savings Bond accounts as well. Got bunch of them when born which I converted to digital for them. Anyway, I have include them to net worth for reason that I maintain and they are beneficiary. It is more for viewing. They are listed in subsection of report.
No comment on whether to include it or not.
But! That is the evil laugh graphic melts my heart. What a cute kid baby $ is. Adorable! I’m pregnant and babies are seeming cuter than I remember.
The pro recommended that I put 30k into baby RB40’s account now… That’s a lot of money and seems a bit ridiculous to me. I’m more comfortable with 4k/year for now. If we have a windfall, we’ll put it into his 529. I include this in our net worth.
Congrats! Can’t wait to see this grow in the monthly updates.
We don’t include our kids’ accounts.
I suppose it depends how you think of the money- is it a means to get Baby Money to choose the kind of education you want, or is it a gift to provide Baby Money with breathing room to make choices?
I believe very strongly in higher education, which is part of why I’ve started a 529 for my kid. But we all have to remember- you can’t buy your kid a good life (and especially not a particular flavor of good life you might want for them), but only a good chance.
Also, even if you truly think of it as a gift (i.e. are saving it to provide Baby Money with options, not yourself) will it motivate you more to watch it grow if you include it in your net worth?
If you had to sell everything off and pay everything off, would you even be able to access it? Or is your munchkin the only person who can access it? If you can access them, I’d include it. If your child is the only person who can access them, I wouldn’t include it.
I think you should include it in your net worth. It’s more of an asset than liability, especially if the money is invested in low risk assets. In accounting a pre paid liability is reported as an asset on the balance sheet and since the college fees are yet to occur, they can be considered a prepaid liability and thus an asset, which makes them net worth. Thanks for sharing
Yay for him having a net worth! I wouldn’t include it in your own net worth calcs, but track it separately… Baby$ could even get into tracking it himself once he learns about money and stuff…
Dang! That kid is loaded compared to most of the world.
What’s that I hear?? No, it’s not a Ferrari… it’s his helicopter taking him to pre-school.
Title and picture say it all! Congrats to Baby J and fam, great way to get started.
I opened an account for my daughter once and she spent it all, it was a real eye opener for me. I just opened another account for her and told her it is a savings account not a spending account and so the lesson begins again. This time for real!
That is great that you already have your baby’s college savings account started. A lot of people wait too long and that never works out well.
Pam
Oh jeez, you guys are almost split exactly 50/50! Haha… 9 of you so far say TO include it, and 8 say NOT to. And then 3+ of you are somewhere in the middle ;)
But I must say you all bring up some EXCELLENT points. And honestly it *is* helping veer me off more in one direction than the other. Which you’ll find out about soon in our next net worth update ;) The main thing this really hinges on is whether or not Baby $ or any future kids of ours DO end up using this 529 in the end. Which we’d have to assume that they WOULD or else what’s the point in even starting it up? If they didn’t, then the money would indeed be 100% ours again – even while penalized up the a$$.
We’ll think a little more on it though and make a final decision here this week. So thanks for all your input! I knew you’d have an opinion one way or the other :) It’s one of those weird gray areas for sure…
A few comments:
@Elle – I LOVE the idea of having “family money meetings!” I SO want to do that too once it’s time for us – that would be sweet! :)
@Mandy @MoneyMasterMom – Yeah, that’s the sucky part. But then again if he WERE 100% going to college and using it later, then it really *would* be an expense, ya know?
@Adam Hathaway – Haha yeah, that’s an excellent point actually – I hadn’t thought of that before ;) Kinda like the whole “Do I inlcude our quarterly tax money in there too” type of deal. You could, but you’re gonna get a huge hit every 3 months! So in that regard it’s TOTALLY not worth it.
@Brian – You bring up a fair point :)
@AverageJoe – Haha… Well even if I DID try that, I’m sure all those penalties that would kick in would totally wipe out any huge profits or whatever anyways ;) Although you never know – if the money magically doubles every year, you might make out pretty well!
@Jacquie – Feel free to vent anytime! I’m learning a lot from it :) Good things to consider and think about as our boy AND us grow a lot over the next 18+ years – thanks for your input!
@Alexis – Haha… I guess their piggy banks do go along the same line as their savings accounts ;)
@JoeTaxpayer – Ahh, I kinda like that – totally makes sense. I mean, even if I just made a few line items to our net worth at the bottom including the info, but *not* in the calculations, that would seem to do the trick too. Hmmm… Good info man.
@Marilyn – YAYYYY, congrats!! And thanks so much – We think he’s pretty cute too, but you know how parents are ;) I pray yours comes out nice and healthy and already smart with money! Hehe…
@Joe @ Retire By 40 – Oh wow. I mean, it does makes sense in an overall game plan to put it in sooner than later, but I’m with you on that one – I’d MUCH prefer to do slower over time than in one large chunk. And honestly I think that’s perfectly fine. Doing things more natural and non-stressful over the years is worth the few percentage points you may lose (or maybe even not!) by doing it all up front. I’m with you on this one :)
@becca – Amen on that. I’m all about giving them good *chances* in this world! :) And that’s def. something to consider – whether or not it keeps use motivated or not seeing it in our net worth like that… I’m gonna have to think about that for a few, it hadn’t crossed my mind. Thanks!
@Cassie – Yup, we can access it pretty much any time we desire, but then we get hit with all the penalties and taxes/etc/etc… But it IS possible.
@Mrs. Pop @ Planting Our Pennies – Awwwww!! That would be awesome!!! Daddy and son updating their net worth every month on the kitchen table – tears to my eyes! :)
@David Hunter – Haha.. Big pimpin’, baby! Literally! (the baby part, that is – not the pimping! ;))
@debtgirl – Oh man, I hope so! I guess you never really think about them blowing it all and not listening to you, haha… I always assume my boy will just be a perfect litle angel ;)
If you’re a sole proprietor you can put your family on the payroll at a young age. Why not make him a “model” for your business and then open up a Roth in his name?
Hi J,
529 accounts do not have to be opened within the state in which you live. The general rule is that if your state gives you a tax deduction, you open the account up there. If not, you open one wherever the fees are cheapest/investments are best. You can use the funds in any state.
I opened one for my little girl recently with the one sponsored by Utah – I live in California. The Utah plan has Vanguard funds and were the least expensive. I use USAA as well, but their funds are more expensive in the 529 plans.
Just a side note… parents can cash checks for minors directly. We bank at Chase and that is how we do it (as instructed by them). The lady told me it is no different than having a minor account under our name. So, you don’t need an account in the minor’s name.
We don’t have a college fund set up for our two year old yet. No way is my kid getting a college fund before all of mom and dads student loans are paid off! Just a few months away from being student loan free though!
As to including it in your net worth. Tricky. Maybe make it a separate footnote to show how it goes up or down without including it in your net worth.
@too funny – Hah! Really? You think you could actually get away with that too and not get in trouble? Don’t think I have the balls for that one quite yet ;)
@Long – Yup, for sure. I would have gone out of state too if mine wasn’t hooking us up so much :) There’s some pretty cool flexibility with the 529s!
@bobbi – Oh cool! I didn’t know you could do that w/ their checks :) And not a bad idea either with holding off until you guys get your loans paid off. Congrats on being so close!
Absolutely! He is part of your family, and darn cute!
Include it! The asset is in your name and not the child’s. Secondly if your kid gets a scholarship you will retain the money. Until it leaves your possession calculate it.
I know, those are all great points! But at the same time it’s dedicated for HIM too, ya know? Esp if I give it to him either way – school or not.
@Janine – Thanks!! We think he’s super cute too, but all parents do, haha…
I’m so depressed. Baby $ has a higher net worth than I do :( (and it’ll be YEARS before I reach his level). Great for you guys!! More motivation for me! lol
Awwww, well you have a LOT more responsibilities than he does too ;) No expenses does wonders for your net worth! Haha…