Building Financial Strength Beyond Investing (Part 1)

Last week, we wrapped up our Where to Start Investing series by focusing on long-term success — learning to be patient, disciplined, and steady through the market’s ups and downs.

This week marks the start of a new journey: Building Financial Strength Beyond Investing. Because true financial health isn’t only about growing your wealth — it’s also about protecting it, planning ahead, and aligning it with your purpose.

Over the next several weeks, we’ll shift from building investments to building stability — exploring topics like college savings, insurance as part of your financial strategy, and long-term planning for your family’s future.

We’ll begin with one of the most common — and often most overwhelming — goals for families: saving for college. Whether your children are toddlers or teenagers, it’s never too early (or too late) to start preparing wisely for the cost of education.

💡 This Week’s Focus: Saving for College the Smart Way

College can be one of the largest expenses you’ll ever face — second only to buying a home. But with the right plan, you can prepare without sacrificing your retirement, your peace of mind, or your financial goals.

This week, we’ll look at how to make college savings work for you, not against you — exploring the most common options like 529 plans, Coverdell ESAs, and custodial accounts, and how to choose the right mix for your family.

You’ll also learn how to balance education savings with other priorities, so you can invest confidently in your children’s future while still securing your own.

📖 Verse of the Week
“A good man leaves an inheritance to his children’s children, but the sinner’s wealth is laid up for the righteous.” — Proverbs 13:22 (ESV)

True legacy planning isn’t just about money — it’s about preparation, stewardship, and setting your family up for lasting stability.

The Rising Cost of College

The cost of higher education continues to climb faster than inflation, leaving many parents feeling anxious about how to prepare. But the key isn’t to panic — it’s to start early and stay consistent.

Small, steady contributions add up over time, especially when invested wisely. Even if you can’t cover the full cost, every dollar saved helps reduce future debt, expands options, and gives your family more flexibility when the time comes.

Common College Savings Options

1. 529 College Savings Plan
A 529 plan is one of the most popular and powerful tools for college savings. It’s a state-sponsored investment account designed specifically for education expenses.

• Tax benefits: Earnings grow tax-free, and withdrawals for qualified education expenses (tuition, books, housing, etc.) are also tax-free.
• Flexibility: You can use it at most U.S. colleges and even some schools abroad.
• Ownership: The parent or guardian controls the account, not the child.
• Investment options: You can typically choose from age-based portfolios, index funds, and other diversified investment options similar to those discussed earlier — stocks, bonds, mutual funds, and ETFs — depending on your plan’s offerings.

💡 Bonus: Many states offer an additional state tax deduction or credit for contributions — check your state’s rules.

Downside: If the funds are used for non-education expenses, earnings are taxed and face a 10% penalty.

📌 Example: Lydia contributes $200 per month into a 529 plan for her son starting at birth. By the time he turns 18, the account could grow to over $75,000. If her son earns a scholarship, she can transfer the 529 to another child or even use it for her own continuing education.

2. Coverdell Education Savings Account (ESA)
A Coverdell ESA works like a smaller 529 plan but with more investment flexibility.

• Contribution limit: $2,000 per year per child.
• Tax benefits: Grows tax-free and can be used for K–12 or college expenses.
• Investment control: You can invest in many of the same options discussed earlier — stocks, bonds, mutual funds, ETFs, or index funds — giving you more flexibility and control over how the money grows.
• Downside: Income limits apply — single filers over $110,000 and joint filers over $220,000 can’t contribute directly.

📌 Example: Marcus uses a Coverdell ESA to help pay for his daughter’s private high school tuition and later for college textbooks — all tax-free.

3. Custodial Accounts (UGMA / UTMA)
A custodial account lets you save and invest money in your child’s name. These accounts are not education-specific — once the child reaches the age of majority (usually 18–21, depending on the state), they can use the funds for any purpose.

• No contribution limits: You can invest in a wide range of assets (stocks, bonds, mutual funds, ETFs).
• Downside: The money legally belongs to the child once they come of age — they can use it however they want.
• Tax treatment: The first $1,300 in unearned income is tax-free; the next $1,300 is taxed at the child’s rate; amounts above that are taxed at the parents’ rate (“kiddie tax”).

📌 Example: Elaine opens a custodial account for her 10-year-old son. She invests in index funds, and by the time he’s 18, the account grows to $25,000. When he starts college, she encourages him to use part of it for tuition — and the rest can go toward his first car.

Balancing College and Retirement

One of the biggest questions parents face: Should I save for my child’s education or for my own retirement first?

Here’s the truth — you can borrow for college, but you can’t borrow for retirement.

It’s wise to prioritize your own retirement savings first, then direct extra funds toward college once you’re on track.

📌 Balanced Strategy Example:
Contribute enough to your retirement plan to get the full employer match. Add to an IRA or Solo 401(k) if self-employed. Then set up a 529 plan and automate monthly contributions.

Even $50 or $100 per month can make a meaningful difference — and compound over time.

Teaching Kids About Saving for College

College savings can also be a powerful teaching tool. As your children grow, involve them in the process — show them how saving works, how interest grows, and why setting goals matters.

Even simple steps like saving a portion of birthday money, contributing from a summer job, or tracking progress together can build lasting financial habits.

💡 Family Tip: Grandparents — and even other family members — can open or contribute to college savings accounts such as 529 plans, Coverdell ESAs, or custodial accounts. It’s a powerful way to invest in a child’s future, strengthen family legacy, and model generosity across generations. Every contribution, no matter how small, helps plant seeds for lasting opportunity.

The goal isn’t just to fund college — it’s to raise financially wise, responsible young adults who understand stewardship and the value of planning ahead.

🎯 Weekly Challenge
Take time this week to review your family’s education goals.

• If you haven’t started saving yet, look into your state’s 529 plan or open a small automatic contribution — even $25 a month matters.
• If you’ve already started, check whether your current savings pace aligns with your future goals.
• If you’re balancing retirement and college savings, revisit your priorities to make sure both are growing together.

💬 Reflection Questions

1. Am I saving intentionally for future education costs, or just hoping to “figure it out later”?

2. How can I balance investing in my children’s future with protecting my own retirement?

3. What small, consistent step could I take this week to begin or improve my college savings plan?

📢 What’s Coming Next
Next week, we’ll continue our Building Financial Strength Beyond Investing series by exploring Insurance as a Financial Tool — how the right coverage can protect your family, your income, and your future wealth-building goals.

Stay faithful. Stay intentional. Each step you take today helps secure the foundation for tomorrow.

🔁 New here or missed a few? Catch up on past newsletters at financebyfaith.beehiiv.com

Blessings and financial peace to you!