If you’re a parent, there is no doubt you’ve heard the tired cliche about kids growing up too fast. As annoying as the saying is, time does seem to slip past you faster when life is busy, and it can be easy to forgo saving for your child’s future.
UNest is an app that makes opening a 529 college savings plan for families quick and automated. For the cost of one monthly fast-food run, you can set and forget your child’s college savings.
How Does UNest Work?
UNest lets users set up and contribute to a 529 plan, which allows money to grow tax-free and be used for a wide range of educational expenses in the future. Any U.S. citizen can create a 529 plan for themselves, current or future children or current grandchildren. Through the UNest app, you can automatically contribute $25 to $1,250 per month into your child’s account. It’s never too late to start, so don’t be discouraged if your child is not a baby. For example, opening an account today for an 8-year-old can result in the following savings with UNest:
- $25/month can grow to $4,038 by 2031
- $75/month can grow to $12,114 by 2031
- $200/month can grow to $32,306 by 2031
When it comes to starting a 529 account, the earlier the better because you have time on your side to grow your savings. For example, if you started an account for a newborn today with $25 monthly contributions, you would save $9,436 with UNest by the time they are 19.
- For the newborn, you contribute $5,700 and earn $3,736
- For the 8-year-old, you would have to contribute $50 per month, or $6,600 just to earn $8,076 through UNest
UNest is also fine-tuning an easy gifting option so that others can contribute to your 529 plan any time. Because at the end of the day, your child doesn’t need another LEGO set, but a contribution to their college savings can go a long way.
What If My Child Doesn’t Go to College?
While the 529 plans are popular for future college plans, your money is not lost forever if Junior decides to skip the degree. You can always change the beneficiary of the account to a family member without incurring tax penalties. The definition of a family member is quite a bit more flexible than you might think—even a beneficiary’s spouse or foster child can use the funds. Here’s a good list of everyone that can be named as a beneficiary if the original beneficiary doesn’t use the funds.
The 529 plan can also be used for non-college educational expenses, such as K-12 educational costs for public, private or charter schools. Each state has its own specific rules on how funding can be used. Ideally, the funds would be used for qualified educational expenses to avoid this fee. However, if you need to cash out your 529 plan for non-school expenses, it is nice to know that you will not be taxed on the total amount. Instead, the earnings portion of a non-qualified 529 plan distribution is subject to income tax and a 10% penalty.
How to Sign Up for a UNest Account
- Enter an email and password
- Choose who the savings account is for (current child, future child, grandchild, or self)
- Enter account holder details, such as full name, birthdate, address, phone number and Social Security number
- Choose your monthly contribution (starting at $25 per month; this amount can be changed at any time)
- Connect with your bank instantly by logging in or set up manual entry with a voided check
- Add more beneficiaries if needed
How Much Does a UNest Account Cost?
UNest charges a flat $3 per month per account. Accounts over $50,000 are charged a 0.25% fee annually. Underlying management fees costs 0.4 to 0.6% annually. UNest says that it can save investors over $20,000 on fees for college when you use them rather than a traditional financial advisor.
Earn $100 With UNest Referral Bonuses
Periodically, UNest offers a referral bonus which sweetens the deal. For July 2020, they offered a $500 bonus for five successful UNest referrals.
Be sure to check the referral page each month to capitalize on these bonuses.
Current UNest Sign-Up Bonus: Earn $10
Right now, new UNest users can earn $10 when they start an account for their child with a minimum deposit of $25 per month. The $10 bonus is only valid on your first child’s account, and adding more children/beneficiaries will not prompt another $10 bonus. The $10 gifts will be paid out 7-10 days after opening your account. See all of the bonus details here.
Why I Became a UNest User
As a fellow parent, I want to give my children the benefits that only time can have on interest-growth savings accounts. However, I also relate to how busy life gets and how even the best intentions to save can be forgotten.
UNest takes the guesswork out of saving for the future. Set it once and forget it or change how much you contribute based on your budget. Any amount saved will be useful for the future, so don’t delay savings until you feel more financially ready.
Even when the budget feels tight, usually saving $25 per month can be done painlessly. Finding an extra $25 in your monthly budget might mean skipping takeout once a month or avoiding Amazon or Target for a day, but it’ll definitely be worth it.