How To Teach Your Children About Finances

Financial empowerment, literacy, and education are so important not just amongst adults, but children too. So, as we kick start 2024 and think about financial goals for the year, many clients and prospects have been asking us how to think about finances for their kids and the best ways to teach their children about money from an early age. So while you start your spring financial cleaning, think about some ways to incorporate finance into your childrens’ lives. While there are many different routes to save money for children and teach them about personal finance, we wanted share a few with you, especially some you can implement this summer. 

First and foremost, we want to stress the importance of teaching children personal finance topics and smart financial decisions from an early age. Knowing what money means to you is an important concept whether you’re a child or an adult. One savings vehicle we always recommend to parents when saving for their children is 529s plans. For further details on 529 plans, you can check out our blog, but this savings vehicle is a great way to get ahead of college and education savings for your kids. 

For those who want to educate their children about money and finances, setting up a donor-advised fund is a great way to get the kids involved in not only charitable giving, but the importance of budgeting and setting money aside for different buckets and priorities. Another question we’ve been getting from clients is where to save “birthday” or “gift” money for their kids? Parents can open a minor high yield savings account for their children to earn maximum interest while still being FDIC insured. As their money grows overtime, you can explain to them how interest works and how money can grow overtime. 

Some other ways to teach your young children about money is to talk about it. Make sure you are having conversations with your children about money, for example, how much things cost and how people earn money so that they can spend it. Teach them the difference between wants and needs. Exposing them to concepts such as these will help them learn about personal finance topics as they mature and enter adulthood. 

It is never too late to start learning personal finance concepts. If you have children that are approaching college and you want them to learn and prepare how to manage and budget their finances on their own, let us know and we are happy to help. We offer financial literacy meetings to children and young adults to educate them on personal finance and answer any questions that they have. If you are interested in educating your children, email us at and we are happy to set up some time to connect and share our resources. 

Do You Have Extra Money In Your 529 Account?

From experience and working with our clients, we know planning and saving for college can be difficult. It’s hard to know what the exact future values of tuition will be and what type of institution (private or public) your child will be going to down the line, which is why it’s always a good idea to work with a financial professional as it relates to education savings in order to talk through ideas and strategies. However, one question we get from many clients and individuals is what happens if I over fund and have extra money in my 529 plan? This is a great question, so let’s take a look at the options you have. 

With the rapid rate of rising inflation, college tuition and costs for both public and private institutions have been skyrocketing, and who knows where they will continue to go. Obviously, every family has a different need and approach to college so this scenario will not apply to all or even most; however, for those who end up with more than their family needs in their 529 account (whether a child gets a scholarship, decides college isn’t for them, or any other reason), there are a few things you can do. 

The first thing many individuals do not know is that you can use 529 money for other educational expenses and purposes, including fees, school supplies, technology, and room and board, as long as it lies within the limits. For more information and details on what additional expenses 529 money covers, head to the IRS website for more. Additionally, a newer item that 529 money can be used for is K-12 tuition at a private, public, or religious school, up to a total of $10,000 per year from all of the designated beneficiaries 529s, which is something that may apply to your family needs. 

Another attractive option for extra funds in your 529 account is the fact that 529 accounts can be transferred from one beneficiary to another eligible member of the family, so if you have extra funds in a 529 for an older child, those funds can be transferred to a 529 for a younger one as well. Additionally, another change to the IRS code for 529s is that you can now rollover funds to an ABLE account for the same beneficiary or family member. 529 funds can also be used to pay off qualified student loans for a beneficiary or sibling up to $10,000 per borrower. Next, another option is to let the funds within the 529 plan grow and remain there with the intention to use it later down the line. As you can see, 529 plans are very flexible and are meant to be advantageous to helping you and your family pay for education expenses for future generations. 

Lastly, if you decide that you do not want to keep the funds within the 529 account or participate in any other options listed above, you can withdraw the funds and close your account; however, you will be subject to a tax penalty, so make sure you are aware of that tax consequence before doing so. 529s are a really great way to save and get started early on your child or grandchild’s education planning. For those of you who want to learn more about what 529s are and how they can be advantageous to you, check out our blog here. Additionally, if you are thinking about opening a 529 account and are looking for some guidance on how to get started, email us at or schedule a complimentary intro call here

A Rule Change Allows Grandparents To Give More To A 529

Do you have a young child in your life that you want to save college money for? In honor of 5/29 day, it’s a great time to think about putting money aside for your grandchild’s and child’s future education. Also, great news, theres a new rule change that may be beneficial to you and your grandchild! With rising inflation, we don’t know what the price of tuition will be when your young grandchildren are finally old enough for college, so, now is a great time to begin looking into contributing to a 529 savings plan. 

So, for those of you who don’t know, 529 plans are a type of investment vehicle that allows you and encourages you to save for your child or grandchild’s higher education using tax incentives, such as such as tax-free earnings and withdrawals for qualified educational expenses. Depending on the state in which you reside, choosing your state’s 529 plan may offer a tax deduction; however, consult with your CPA or financial advisor to see if the deduction outweighs the investment options and fees versus an out-of-state plan. 

You can think of a 529 account like a traditional IRA or 401(k)account, where the growth compounds tax deferred as long as its used properly. In addition, parents and guardians have the potential of earning more by investing instead of leaving the money in a traditional bank account.

In fact, for you grandparents out there, there was a recent change to the financial aid rule allowing you to contribute to a 529 savings plan without penalizing or interfering with your grandchild’s eligibility for financial aid. This eligibility has long been issue for many individuals, so starting in the 2024-25 school year, children will no longer have lessened eligibility for financial aid while also having a grandparent 529. “The fear that a grandparent helping their grandchild by using their own 529 plan would interfere with them getting financial aid, that worry is gone now with the new rules,” said Stuart Siegel, president of college financial-aid service FAFSAssist.

A 529 plan is a great idea for parents and grandparents who place importance on a college education and want to save money when making financial contributions. Also, given the new rule change, if you are a grandparent, you now have the opportunity to contribute even more dollars towards college education. The benefits seem so advantageous! So, even if you think your grandchildren have many years until they are off to college, it’s never too early to start thinking about saving for it.  For more information on 529s, check out the IRS website here. If you have any questions about setting up a 529 plan, please reach out to us at or schedule a 30-minute complimentary intro-call here -we are here to help!


2022 FAFSA Updates for Grandparent-Held 529s

With Thanksgiving and Giving Tuesday behind us and the end of the year only a month away, grandparents might be thinking about boosting up their grandchildren’s college savings accounts before 2022. It’s important to know that there are a few exciting changes to FAFSA rules for grandparent-held 529 accounts that will be happening in the near future. 

So what are these changes? The major change is that students will not be required to report any cash support they receive, including funds they receive from grandparent-held 529 accounts. This means that grandparent 529 dollars won’t be counted at all and students will not have to count 529 distributions from grandparents as untaxed student income the next year. This is exciting news for both parties involved, allowing grandparents to contribute to help cover the high costs of higher education without impacting students’ financial aid opportunities. 

Even with this new proposed change in place, grandparent-held 529 dollars are still being used on the CSS profile, another financial aid form used by private institutions. It is unclear how this will play out in the future, so stay tuned for updates. The new FAFSA form is currently being constructed and is said to be released later than the October 1 deadline, so it’s important to keep an eye out for when this new rule will apply to your situation and plan. We will continue to follow the FAFSA changes for you, and be sure to report any further changes as they arise.

At Sherman Wealth, we believe 529 plans are a great way to save for your children’s and grandchildren’s college expenses or K-12 private school tuition, while also receiving favorable tax benefits. If you aren’t quite sure what a 529 is or how to start one, be sure to check out our previous blogs discussing the components of 529 plans, as well as how and why you should start saving for your children’s or grandchildren’s education as soon as possible. If you have any questions about 529 plans and family contributions, email us at or schedule a complimentary 30-minute consultation here


Fall College Action Plan

Is your child a senior in high school this year? If so, you are likely in the throes of the college planning process. While this process is usually quite overwhelming, it doesn’t have to be too stressful if you plan accordingly. Here are some helpful tips to help you understand what you and your child should be doing this fall to be prepared for the college application process.

Encourage your child to meet with their school counselor. The counselor will help your child work on and submit their applications and make sure they are hitting the most important points they need to. Most high schools will have colleges visiting each week over the next few months so make your child takes advantage of these opportunities. Next, create a college calendar. This calendar should include application deadlines and other crucial dates.  

If your child hasn’t already taken their college admission test(s), make sure they are signed up to take them in the fall.  Many seniors also retake college admission tests at this time to improve on a previous score. In addition, make sure to check out whether the colleges your child may be interested in are “test optional” since many colleges no longer require tests for admission.

If your child is applying to and thinking about scholarship opportunities, they should reach out to the school counselor. Typically these can be found online, but the school counselor should have the most in depth information and can help the students submit these applications. In addition to school scholarships, if your child is applying for financial aid, remember to fill out the FAFSA beginning October 1. If applicable, also make sure your child completes the CSS/Financial Aid Profile, if required. 

Encourage your child to set up college interviews. These interviews will help your child get prepared and learn more about their desired schools. Each school has its own interview process, so have your child check out the individual school information on their websites.

Senior year is a big year for your child as they balance schoolwork, extracurricular activities and the college application process. The guidance listed above will give you and your child the necessary preparation to start applying to colleges over the next few months. If you need any additional help or information about the college financial aid process, be sure to reach out to us at and we can point you in the right direction. 

If you have younger children and aren’t quite in the college planning process just yet, you can at least make sure you’ll be financially prepared for when they do head off to college by starting a 529 plan. We’ll talk more about this in our next blog. 

Financial Planning Checklist For College Graduates

Just graduated college and not sure what to do next? Want to set yourself up for financial success, but not quite sure how to get started? Well, you’ve come to the right place! We recently published a Financial Checklist for Recent College Grads that will walk you through important and easy financial steps to take as you embark on the next chapter of your life. You can download the checklist here. 


Using wants vs. needs along with the bucket strategy, you can build out your priorities and create a budget that works for you. The bucket strategy is when you create different buckets based on priority, importance, time needed to save, and money needed to save and distribute your money to each bucket in order to reach your goals. 


You’ve had a few summer jobs & have a few dollars saved up. Open a high-yields savings account with the highest interest rates that will earn you the most money on your dollars and continue to save! Click here for CNBC Select’s top HYS accounts. Starting early and saving the most you can while you are young is extremely important and will help you the most in the long-run. 


Once you graduate college, you should take on a source of debt by getting your own credit card and building your credit. But, make sure you pay your bills in full & on time! PS: Don’t forget about those college Verizon cable bills! Check out our podcast with KC Cole to get some tips on how to better and build up your credit score. 


Contribute to a Roth IRA & opt-in to your company 401(k) if offered as it’s a great way to save for retirement with tax benefits. Always take advantage of the company employer match! If you take a look at the JPMorgan chart below, you can see the benefits of saving earlier rather than later. 


You are the kings of social media! Take your finances online too. Reach out to us to get access to our financial client portal/app that allows you to track all your data in one place, and on your i-phone! Email us at if you would like a complimentary trial. 


When starting a new job, it’s always important to take advantage of all that your company offers, in regards to retirement accounts, health benefits, and more. Talk to HR to make sure you understand the full scope of your company benefits. 


Whether it’s learning about and investing in the stock market or saving for graduate/medical school, invest in yourself & be smart about achieving your goals. 

While these are only a few of the financial moves you should make when graduating from college and prepping for the next few years of your career, there are many more things to consider and ways to make yourself financially fit. If you would like to learn other easy ways to set yourself up for financial success, reach out to us at or sign up for a complimentary college grad prep session here. 

Tax Break Adds Perk To 529 College Plans

529 plans are not only a great estate-planning tool way to save for your children or grandchildren’s’  college tuition, but they have another added bonus too. Under this new tax law, individuals can make a lump-sum 2021 gift of up to $75,000 to fund a 529 college savings account for a child or grandchild and claim a federal gift tax exclusion for the full amount. 

“This accounts for five years’ worth of the standard $15,000 annual exclusion that normally applies to 2021 gifts,” according to the IRS. We have found that many people are not aware of this tax break and how they can benefit from this, which is why it’s important to share the knowledge. 

Another interesting point to note is that the Tax Cuts and Jobs Act of 2017 now applies to tuition for grade K-12, which is useful for those who decide to send their children to private school. 

It’s important to note that grandparents can really benefit from contributing to a 529 plan, as it removes assets from taxable estates in large sums and the money is invested to grow and earn income tax-free. If you are currently contributing to a 529 plan or are considering opening one, we are happy to discuss your situation and more of the benefits involved. If you have any questions or would like to discuss these plans, please feel free to contact us at or schedule a 30-minute complimentary meeting here

Financial Advice For Parents

Raising a child in today’s world can cost hundreds of thousands of dollars. As a parent of four children ranging from ages 5 to 16, I can attest to just how expensive kids can be. Besides just the essentials like food and clothes, there are club teams, tutors, dance lessons and so much more. With each additional family member comes new financial considerations and expenses. The importance of planning for these costs before they arise is a key reason why many financial advisors are targeting young families and helping them successfully navigate how to cover their children’s expenses without compromising their own financial security. Here are a few top takeaways from some of these advisors:


With a high school junior in our house, it won’t be long before we are paying that dreaded college tuition bill. And, due to the ballooning costs of higher education, this bill is not likely to be a small one! If possible, new parents should try to start saving as soon as they can for their child’s college tuition.The earlier you start saving, the better prepared you’ll be. If you save $500 a month at birth, you should have around $190,000 saved by the time that child reaches 18 (assuming an annual return of 6%). However, if you don’t start until your son or daughter is 10, you’ll only have around $60,000 by the time they graduate high school. Setting up a state-sponsored 529 college savings plan, allows parents to invest money and then withdraw it tax-free, so long as the funds are used for certain education expenses. However, as you prepare for your children’s future, make sure that you remain focused on your retirement saving as well. There are lots of ways to pay for college, but you can only use the resources you’ve accumulated for your own retirement.   


When our first child was born, my husband and I were both working, and trying to find affordable childcare was not easy. Childcare is one of the biggest expenses new parents will face, especially if both parents work. In some cases, one parent will decide to leave their job and take care of the child themselves, especially if the cost of childcare is more than one parent is making. This is exactly what happened when our second child was born, since it was no longer cost effective to pay for childcare for two children with my salary.   

Meanwhile, childbirth and adoption count as qualifying events that allow parents to make changes to their employee benefits outside of the open enrollment period at work. For example, new parents can expect to see their medical expenses rise and those who have access to a flexible savings account and health savings account at work should use them since the money put into an FSA or HSA avoids federal taxation. In some cases, employers offer a Dependent Care FSA, which can be used for costs picked up from a nanny, babysitter or childcare center.

When it comes to health insurance, if both parents work, you should examine which plan will cost less to add the child to. Most doctor visits in the first couple of years are considered wellness visits, which are typically free or very low-cost in most health-care plans today. But, you should look into which plan is most cost-effective in the event of a trip to the emergency room or having to see a specialist – even with good insurance, the price tag of a broken bone is a lot more than you might think!


Even though it’s not something most people like to think about, preparing for death is of utmost importance when becoming a parent. Your financial advisor should be able to run various calculations to figure out the amount of protection you would need. Many families make the mistake of only getting life insurance for the main earner, experts say, but both parents should be covered. Many people think that since stay-at-home parent isn’t actually earning anything, they don’t need insurance. However, when it comes to life insurance, you need to evaluate what it would cost to have someone else take care of your children if something were to happen to that parent.  

It is also extremely important to put together estate planning documents, including a will and health-care directives, as well as discussing appointing a guardian in the event of an unexpected life event. When we found out we were expecting our first child, it forced us to have some difficult conversations about who we would want to take of our child and how our assets would be distributed if something happened to us. It’s also important to revisit those questions each time you add another child to your family or if there is another major change to your assets. The guardians you might have written in your will when you were 25 might not be the same guardians you would choose when you are 45. None of these decisions are easy ones, but they are vital to preparing for your life as a parent.


With all the additional expenses new parents can face, from diapers to a larger home and mortgage, it’s more important than ever to have a safety net for those unexpected costs. Having children is a good reason to have a bigger emergency fund, simply because there are now more people who are dependent on you financially. Aside from the random home and car repairs that always seem to pop up when you least expect them, now add braces, sports equipment and teenage social lives to the mix. Having some money from each paycheck deposited directly into an account that you don’t touch is an easy way to make sure you are creating an ample emergency fund should you need it.  

There are so many wonderful aspects of being a parent, but it is definitely a costly undertaking. Seeking some financial guidance before you become a parent is always a good idea, but it’s never too late to start planning for your future with a family. If you have any questions about saving for college, choosing the right health plan, putting together your estate documents or anything else related to your financial goals or plans, please contact us.  We offer a free 30-minute introductory consultation and would love to hear from you!  Check out our other blogs for more financial advice and tips.


National 529 College Savings Plan Day

Today is Friday, May 29 which means it’s “529 Day” or “National 529 College Savings Plan Day”. Each year, National 529 College Savings Plan Day draws awareness to the tax-advantaged way of putting money away for education costs. To help ease the burden of student loans, some parents put money aside each year for their children’s education. 529 plans have grown in popularity over the years, however many people still remain unaware that 529 plans are even an option for education savings.

So, what exactly is a 529 plan? 529 plans, also referred to as “qualified tuition plans,” are tax-advantaged savings plans sponsored by states, state agencies or educational institutions. Earnings are federally tax-exempt and most states exempt earnings from state income tax.

There are two types of 529 plans: Prepaid tuition plans and education savings plans. Both can be used as a way to save for a child or beneficiary’s education, but differ in their methods.

Prepaid tuition plans allow people to purchase units or credits at higher education institutions at current prices to be used in the future by the beneficiary. The credits are purchased for participating colleges or universities, which are usually public and in-state. However, it may be able to be used for an equal payment to private or out-of-state institutions.

The second type of plan is an education savings plan. It serves as an investment account that can be used for future qualified higher education expenses. Similar to a Roth401(k) or Roth IRA, plans offer several investment options and funds will rise and fall based on the investment’s performance. Generally, the accumulated funds can be used at any participating college or university, regardless of its location. You can also use up to $10,000 to pay tuition at elementary or secondary schools.

The ways you can spend this saved money differs based on the plan. Prepaid tuition plans can be used for tuition and mandatory fees, but not room and board. Education savings plans, however, can be used for tuition, fees, books, supplies, equipment, computers and sometimes room and board. Technically, a person can use the funds accumulated in an education savings plan for any expense they choose, but if the funds are used for a non-qualified distribution, they are subject to income tax, a 10 percent penalty and any additional state penalties. If a beneficiary doesn’t need the funds, they can be withdrawn with the payment of income tax and penalties, although there are exceptions to the penalty fees.

529 Day is a great time to review your college savings progress and if you haven’t started saving for college yet, it’s not too late!  Some states currently have different contests and incentives to try to boost interest and participation in their 529 savings programs. Click here to see what your state might have to offer.  If you have any questions about 529 plans or would like us to help set up a plan for your beneficiaries, please contact us – we’re here to help!

Ways To Build Wealth And Boost Your Savings While You’re Stuck At Home

We’re all spending more time at home these days and it’s likely that money and finances are a stress for many during this pandemic. As the markets continue to be extra volatile,  many people are feeling a lack of control when it comes to their money.  Even though there isn’t much we can do about the state of the overall economy, there are some small-scale things you can do right now, from the comfort of your own home, to help you feel more in control of your finances. If it is all you can do right now to keep up with your bills, that should continue to be your main priority.  However, if you’re in the fortunate position of having an income or some extra cash, the following tasks take 30 minutes or less and might just have you feeling a little better about the state of your finances.




Every solid financial plan starts with a good budget, and now is a great time to go over yours. You should review your spending habits and try to determine which areas of your spending are relatively fixed — such as monthly rent and insurance coverage — and those that are discretionary, like your lattes, subscriptions and eating out. 

Since you’ll likely be spending a lot of time at home this month, most of your convenience purchases will probably trail off. Comparing last month’s expenditures to this month, you will see where you are spending your money and you will be better positioned to make changes to your spending habits in order to prioritize saving money and spending on what you deem essential for your household.




Write down all the things that you want to do in your future – you can do this by yourself or with a significant other. Break it down into five-year segments. What do you want to do, where do you want to go, and what do you want to accomplish during each five-year segment? If you have career goals that include starting a business, making more money, or changing your job, you might need to learn some new skills to start down that path. 

Being confined to our home offices gives us a great opportunity to focus on learning something new and developing plans for the next steps in life, whether it is signing up for an online class or doing some research on what it might take to take your career in another direction.




If you’ve been considering a college savings plan for your child, setting one up online is quick and easy. You should start by reviewing the 529 plan options where you live, since they often provide tax benefits while you save for your child’s college education. Just remember to keep your own future financial goals in mind, as well. Saving for your children’s education is very important, but should come second to saving for your own retirement.




You should make a list of your financial accounts that include beneficiary designations —  like your IRA, 401(k), or life insurance — and make any necessary beneficiary information adjustments. Since these designations determine who will receive your account upon your passing, if they are left blank or not updated, your wishes could be ignored and assets could go to an ex-spouse, or state law could become applicable and decide how to split your accounts.




Now is the perfect time to set up a separate online high-yield savings account for your specific goals, whether it be for a vacation, saving for the holidays or possibly a new car. To make things even easier, you can also set up a direct deposit so that you put a little bit away from each paycheck towards that objective. However, remember that these “extras” should take a backseat to your emergency fund.  Having three to six months of expenses set aside in a money market or high-yield savings account can provide peace of mind and can be a lifesaver in times of temporary job loss or medical costs.




Now might be a good time to do some overall bookkeeping.  This can include reviewing your insurance policies to see if you still have sufficient coverage for your needs, or working on your estate plan (are your medical directives all updated?).  If your kids are old enough, this could even be a good opportunity to teach them how to balance a checkbook by showing them how you do yours.



If you have money in the market that’s earmarked for retirement, you might be a little worried about how current events will impact your goals. Now is a good time to have a call with your financial planner to determine if your portfolio is still meeting your long-term goals, or if it needs to be adjusted based on current events. 


Even though we may not have expected to be spending this much time in our homes over the past few months, it’s important to take advantage of the time while we can.  These unprecedented times have given us the opportunity to slow down and focus on our families, as well as other important aspects of our lives like our finances.  Taking just a half hour each day or week to go over these tasks can help us to feel more in control and less stressed about our money as we deal with the uncertainty of the times.  As always, if you have any questions about any of the suggestions above or any other concerns about your finances, please contact us.  We are here to help and we are all in this together!