Money Monday: Financial Fundamentals of Young Money

Let me state this unequivocally. Funding education is a financial fundamental! You can debate this issue if you want to, but the stats don’t lie. According to U.S. Census data, college graduates, on average, earn twice as much during their lifetimes when compared to others with only a high school diploma. Let’s talk Money Monday fundamentals on the Zoom Conversation on January 31, 2022, at 7:00 p.m. Sign up at:

The magnitude of funding a college education can be complex and require several levels of analysis. First, consider investing options. Then, it would be best if you decided your child’s investment combination, such as how much of the portfolio will be in stocks, bonds, ETFs anything else. Another consideration will be which 529 plan you should choose. And these decisions are just the beginning. Let’s take a look!

Where to Invest

Think through the alphabet soup of college education combinations before we even get to choose an investment vehicle for your child’s college funds. What do I mean? I mean, most families pay for college education through student loans, scholarships, work-study, savings, financial aid, and out-of-pocket payments.

The investment vehicle options may include Roth IRAs, prepaid college savings plans, 529 plans, and UGMA/UTMA accounts, to name a few. UTMA stands for Uniform Transfers to Minors Act, and UGMA stands for Universal Gifts to Minors Act. Both accounts allow you to transfer financial assets to a minor without establishing a trust. Another critical question you’ll have to answer is, are you pretty sure you will not need to withdraw any of the invested funds before your child is ready to enter college? Assuming you will not need the money, then a 529 plan may work for you because they usually have penalties and interest attached for early withdrawal. On the other hand, if you may need some flexibility in case the money may be required before college, then a Roth IRA or taxable account may be preferred.

The Right Plan

Most families fund education using 529 plans, but what considerations are essential? The first would be should you invest in your own state’s 529 plan or choose an out-of-state 529 plan? Investing in an out-of-state 529 plan means that you would not be able to benefit from the tax deduction available from your in-state plan.

As with any investment, you have to consider the cost. These 529 plans would include, for example, sales charge if invested through a broker, administrative fees, fund expenses, and administrative fees. Asset allocation will also play an important part since most 529 plans offer age-based options, which means these plans get more conservative as the child ages close to entering college. Further consideration will be required regarding who is managing your 529 funds. Why is this important? If various managers like a Vanguard manage your 529 plan, it would probably suggest that the plan administrator has a specialist in specific investments. If a firm manages it without specialist resources, you would want to know that information because the younger your child, the more likely investments would be in stocks, and opposed to when the child ages closer to college, the investment is in less risky vehicles such as bonds. But if the investment manager does not have a specialist, will you be comfortable being an experiment?

I guess by now, you are getting an understanding of how much work, time,  effort, and analysis is required in choosing the funding of your child’s college education. While it may seem daunting and overwhelming, you can do it!  I’ll leave with these two takeaways. It’s all about having a plan for your kids’ future. Work on a plan! Next, you don’t need to be a parent to establish a 529 for some young people and invest in their future. Education matters!


Today’s what’s up is about the Internal Revenue Service (IRS). You may not be excited about this information, but here it is!  The 2022 tax season begins on January 24, 2022- meaning you can start filing your 2021 tax return today. On average, the IRS anticipates that most taxpayer will receive their refunds within 21 days of filing. However, you will have to file electronically and choose direct deposit to qualify for the 21-day refund. Finally, suppose your tax refund involves either the Earned Income Tax Credit or Child Tax Credit. In that case, you will not receive your refund before mid-February at the earliest, even if you file your tax return on January 24, 2022. Tax law prohibits the IRS from issuing refunds involving Earned Income Tax Credit or Child Tax Credit before mid-February 2022. And that’s what’s up! Let’s talk Money Monday fundamentals on the Zoom Conversation on January 31, 2022, at 7:00 p.m.  Sign up at:

Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2022. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.

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