How Much Should You Fund a UTMA?
Are you trying to set your kids up for financial success but are unsure of what to do besides open a savings account for them? Are you worried about putting money into a 529 education plan because you’re unsure of how much money they will need for college? A UTMA (Uniform Transfer to Minors Act) account might be a great alternative. It allows you to invest in your child’s future without locking the funds solely into education expenses, offering flexibility for their 20s and beyond. But before you rush to your broker, it is important to learn about some of the drawbacks of UTMA accounts.
How much should you fund a UTMA? Assume you have 529 college savings plans adequately funded (whatever that means to you), you don’t want more stuff crowding the house, and the child’s physical piggybanks and treasure chests are full. Can you do better than a child’s savings account at a local bank?
~FI Physician
This article by FiPhysician goes into the nuts and bolts of UTMA accounts and discusses how much money you should put into such an account. While the amount obviously depends upon your financial situation, FiPhysician goes into several factors you should consider. While there are no limits on how much you can put into an UTMA, you should know that dividends and capital gains in the account can be taxed. It’s also important to understand that when your child reaches college age, up to 35% of the assets counted against them when financial aid is considered. However, on the positive side, you can help your children invest in stocks and ETFs which have a much greater potential rate of return than bank accounts. It’s also important to understand that money put into an UTMA is an irrevocable transfer and once your child turns 18-21, they gain full control of the account and could spend the money however they choose. If you’re considering an UTMA account, the full article is definitely worth a read.
Tuition Insurance: How It Works And Is It Worth It?
Are you worried about the high cost of college and what might happen if your child has to withdraw unexpectedly? With tuition rates climbing, it’s a significant financial commitment, and unforeseen medical or personal emergencies could mean losing thousands of dollars. And as a parent, you’re frequently required to cosign loans meaning you are on the hook if your child can’t pay their loans. Would you be interested in protecting yourself in case your child has an emergency and needs to drop out of college? It turns out that there is a product, called tuition insurance, that can help in some situations. But is it right for you?
The biggest danger of a private student loan is that the cosigner is also liable for the debt. So, should something happen to her daughter, and she can’t graduate and earn income, she will be on the hook for the debt.
~Robert Farrington, The College Investor
This article by Robert Farrington explains how tuition insurance works, covering essential details like what’s included and how much it costs. Policies typically protect against medical withdrawals, including mental health issues, but don’t cover academic failures or voluntary dropouts. Farrington highlights two of the top providers, GradGuard and A.W.G. Dewar, both of which offer affordable plans with flexible coverage options. With tuition insurance costing around 1% of total tuition, it can be a low-cost way to protect a large financial investment. Whether you’re a parent or a student considering tuition insurance, the article offers a thorough guide on making an informed decision.
12 Affordable Ways People Travel On a Budget
Are you dreaming of traveling the world but worried about how to make it work on a budget? It may seem daunting, but there are several creative and practical ways to make travel more affordable without sacrificing the experience. From embracing budget airlines to exploring offbeat destinations, you can cut costs and still enjoy meaningful travel adventures. By being strategic about timing, using home-sharing platforms, and taking advantage of local public transportation, you can significantly lower your travel expenses.
Consider participating in volunteer or work exchange programs that offer free or heavily discounted accommodations in exchange for your skills and assistance. Websites like Workaway, HelpX, and WWOOF connect travelers with hosts worldwide who provide room and board in return for a few hours of work per day.
~Clair Conway, Invested Wallet
This article by Claire Conway provides 12 smart hacks for budget-conscious travelers. Some ideas include traveling during off-peak times to save on flights and accommodations, and opting for free activities like museum entry days or volunteering through work exchange programs. Additionally, Conway highlights how eating like a local, utilizing travel rewards, and considering alternative accommodations like hostels or campgrounds can help keep costs down. If you’re looking for ways to make your travel dreams a reality without breaking the bank, this guide is packed with useful tips to get you started.