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Living the Dream

“Parents always have dreams for what they want their kids to be. I just want them to be able to pick what they want and have the ability to do it.” – Karisa Malchow, mother of 3 young children.

That’s the “why” for 529 plans in a nutshell. Why open a 529 college savings plan? Because it helps dreams comes true.

For Karisa, giving her children the ability to someday go to college and fulfill their dreams – without the burden that can come with student loan debt – is something she and her family set out to do when they were very young.

“I think it was actually the day of or the day after our first was born, when my dad went and opened a savings [plan] for him,” says Karisa.

Karisa’s father did that for Kincaid, 4, and when Keating, 2, and Kallahan, 1, were born as well.

“When you’re a first-time parent to a youngster there’s so much that is overwhelming you at any given moment in a day,” Karisa says. “Even all the paperwork for maternity leave and all of that is just overwhelming in and of itself once you get home from the hospital.”

“So, having something that’s so super easy to set up is one less thing to worry about.”

Knowing a 529 college savings plan – whether you put in $10 or $100 – is growing as your child grows, lets parents spend time (and money) on everyday expenses.

“You’ve got high costs when you’ve got kids. Especially young kids if they’re in daycare. You’ve got food. You’ve got all these other expenses, so it’s kind of ominous to think of another expense on top of that, but knowing that you can just keep adding little bit by little bit as you go along is huge.”

“There’s all the talk about the rising cost of college and everything and we’re still paying off some student loan debt. So, it’s just really nice to be able to have something that’s set and that’s there, that’s ready for each of them so we can help them as much as we can financially when it gets to that point.”

Dealing with their own student loan debt

Karisa and her husband Doug met in college, and both graduated. Karisa had a volleyball scholarship, which meant much of her college expenses were taken care of. Doug used the college savings his parents created for him, and also took out student loans.

“The debt of which we’re actually still paying off right now,” Karisa said. “So, we know the importance of saving for college. We definitely want all our kids to go to college, but we don’t want them to be in this situation where they’ve got their own family and they’re still paying off college themselves.”

Of course, the Malchows aren’t alone when it comes to student loan debt. With more than 44 million borrowers collectively owing $1.5 trillion in student debt, the student loan debt crisis continues to grow.

With three children they hope to send to college, and with the rising costs of tuition, it was imperative for Karisa and Doug to have some sort of college savings plan for their children.

“We either had to have a savings plan or we were going to make all their middle names ‘scholarship,’” Karisa joked.” That’s kind of where we were at.”

The Malchows learned about their state’s 529 college savings plan through friends. When they learned about the tax advantages and the growth possibilities of the 529 plan, their parents and grandparents moved their savings into 529 accounts.

“Now we have a certain portion of our paycheck that’s pulled out every month that goes to each one of their funds,” Karisa said. “That’s another great thing about the 529 plans – it’s so easy.”

Focus on education

There are all sorts of savings accounts available these days, but 529 college savings plans are specifically for education, and are a popular choice for parents who want a means to help pay for their children’s college education.

“That’s the thing that really made us go with the 529,” Karisa said. “I think it was the focus of the college savings, knowing that it was for that purpose. It just kind of felt better that it was a little more focused on that specifically.”

“We really loved that focus, and in working with the different advisors for a 529 and setting out what that looks like for the next 18 years for each of them …  it’s so easy to set up. And it’s super low maintenance.”

For the Malchows, education is an important part of their daily lives.

“Their education is very important to us,” she continued. “Our parents really impressed that upon us, so we want to make sure we continue that with our kids. And to do it this early is huge and to have all that time built up so that when they do get to the college time frame, they’re ready for it. And we’ll know that we’ve helped them as much as we possibly could up to that point.”

As for those dreams of what their kids will be, Karisa says she thinks Kincaid might be a budding engineer.

“He just absolutely loves LEGO bricks and he loves the concept of all that, so I can totally see him being in some kind of engineering or science field. Whenever we do experiments at home, he really likes that. Science and engineering. That’s probably what’s he supposed to do, and it’s nice that there’s already money earmarked. Just being able to support that is huge.”

Whether your child wants to be an engineer, a hair stylist, teacher, etc., those are decisions that will be made in the future. Right now, parents of young children can start saving for the higher education that their children will need for those professions.

And remember, saving a little can turn into a lot over time. Saving bit by bit, brick by brick, can eventually build into a college savings that will help your child become that LEGO-inspired engineer, or whatever they dream to be.

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