Money Talk With Slater

Making Money Across the Board

Monthly archives "October 2018"

Reasons to Have a Piggy Bank

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In an effort to encourage all to save, we want to showcase one of the simplest, convenient ways to save: the piggy bank.

Piggy banks are a great way to save money from childhood all the way to adulthood.

Each person gets a piggy bank at some point in his or her childhood. It’s one of the most efficient ways for parents to teach their kids the value of saving money instead of spending it. More importantly, the piggy bank is also a great reminder for parents and young adults who might have failed to recall the significance of saving.

Here are the reasons why everyone, young or old, must have a piggy bank:

It helps keep loose change. Rather than losing all those nickels, dimes, and especially pennies under the couch cushion, in the bottom of your purse, hold onto them and put them inside a piggy bank. Not only will this aid in cleaning up the car and house, but it will also further strengthen good money savings habits.

Sets a great example 

Piggy banks are an effective and easy way to teach children about the importance of saving. They may not be saving up for a huge purchase, but they might want to save up for something, whether it’s a new toy, a new bike, or new clothing. Teaching them the advantages of using a piggy bank will go a big way in the future.

Reinforces “Always Be Saving” 

Saving should constantly be top of the mind when it comes to money. As the saying goes, “a penny saved is a penny earned.” It doesn’t matter if you’re putting some of your pay into a savings account or putting change into a piggy bank, every little bit helps. With a piggy bank, you’re able to see your money increase every time you save. This is a good habit to keep even throughout your adult life.


The Cons of a 529 Plan

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While there are advantages to using 529 plans as an investment for college funds, there are some huge cons to consider:

While 529 plans are a great idea to help save up for your child’s college, they have some disadvantages too.

You have to use the money for college
If you don’t use the money you invest in a 529 savings plan for college tuition, you will be penalized when you take out the money to use it for something else. Also, both your state and the federal government will tax the earnings on your account in your present tax bracket.

It could affect your financial aid eligibility
Currently, financial aid eligibility isn’t disturbed much by 529 plans, college savings plans or pre-paid tuition plans since these plans are thought to be part of the parents’ assets in the calculation of the Expected Family Contribution (EFC) toward college costs.

Your investment options are limited
Even though your 529 savings plan is tax-deferred, you might give up the chance to change your mind about where to invest your money. Meaning, if you discover a mutual fund that is growing more in interest than your 529 plan and desire to move your money, then you will be subject to a penalty.

Your investing window may be tight

Many plans have an all-in-one fund that’s just like a target-date fund. It’s created to own more stocks when your child is young and more bonds and cash equivalents, such as money market mutual funds when he or she nears college.

If you have a late start, you could find yourself stuck in a close investing time frame.

Put off saving until your child leaves daycare, for instance, and you’ll have just around 13 years to grow a college fund.

Since you’ll need to get into asset-preservation mode six to seven years before the child starts college, you’ll honestly have only around five years on the front end to put in your portfolio higher-yielding stocks or CDs.