Building Generational Wealth

As a parent, you’re likely familiar with the whirlwind of responsibilities that come with raising a family. From childcare expenses to college tuition, the financial journey can feel daunting. However, the earlier you start planning, the better off your family will be in the long run.

The Importance of Education Savings

One key aspect of financial planning for families is education savings. Did you know that investments inside a 529 College Savings account for your child's education will grow tax-free? If you’re planning to pay for a full college program for your child, this tax savings alone could be enough to fund a full year of tuition at a public in-state university*. Still not sure if the 529 is right for you? Here's an added bonus: Secure 2.0 allows leftover funds in your child's 529 to be rolled into a Roth IRA allowing you to provide for your child’s financial future beyond college. However, limitations apply and California has its own plan for taxing these rollovers so check your state's rules for specifics.

The Power of Compound Interest

Compound interest is your friend when saving for large financial goals. If you start early, compounding interest can help grow your savings. For instance, if you save $250 per month from your child’s birth, compounded at 7% annually, this savings would grow to approximately $125,000 by the time they reach age 18! Better yet, if it’s in a 529 College Savings account that's $125,000 tax-free for college.

Beyond College Savings: Building and Protecting Wealth

But financial planning for families isn't just about saving for college. It's also about building wealth and protecting it from risks that can erode your hard-earned savings. These risks range from sudden tragedies such as the loss of a loved one or disability, to potential market fluctuations and the burden of taxes and probate fees on your estate. That's why working with a holistic financial planner is crucial to ensure you’re planning for, and protecting your family’s financial future. 

Financial planning has evolved beyond investing. A goals-based financial planner considers all the things you want to accomplish, models out your financial decisions, and determines the best course of action to optimize your financial resources over the long term.

Upcoming Webinar: Building Generational Wealth

To learn more about a holistic approach to Building Generational Wealth, please join our free upcoming webinar. Attendees will learn valuable strategies for building lasting wealth from Certified Financial Planner™ Professional, Heather Comella. Read more and register here.

*Example assumes an initial investment of $10,000, monthly investments of $500 for 18 years, annual investment return of 6%, compounded monthly, and a federal tax rate of 32%. Investment losses could affect the relative tax-deferred investing advantage.If you withdraw money from a 529 without incurring qualified education expenses, you'll face taxes and penalties on the investment earnings. This hypothetical illustration is not indicative of any specific investment and does not reflect the impact of fees or expenses. This example is shown for illustrative purposes only. Past performance is no guarantee of future results.