My daughter Jaslyn was only a few months old when I wrote 18-year head start. (If you haven’t read it, please go check it out) Now, that little girl has made her first trip around the sun. My wife and I have stayed committed to making sure our daughter has the best financial head start possible. Over the past year, I’ve done numerous talks about the 18-year head start article and how I would continue to share how her financial plan progresses.
So, let’s start from the top with the updates.
Savings Account – – this account was set up because we wanted Jaslyn to have some liquid cash. But, honestly, she doesn’t need liquidity because she has no bills. It’s been the worst overall performer (and probably always will be) because rates on basic savings accounts are low. But that’s okay. This account isn’t designated for growth, so we’re not concerned with its performance.
Jaslyn has received some cash gifts and earned a little bit of income. My wife and I agreed that whenever Jaslyn receives a cash gift, we have to decide if all of it goes into savings or if we carve out a little bit and throw it in her investment account.
Life Insurance policy – – this was set up because my wife and I wanted to lock in Jaslyn’s future insurability. So, we checked that off the list. As a reminder, we decided on a variable universal life (VUL) insurance policy because of the potential for the policy to build substantial cash value. (Check out Permanent Life Insurance 101 to learn more about VUL’s)
Here’s how we structured her policy:
- The policy (to put it in force) only needed a minimum level of premium. However, we’re paying a higher premium; the remainder goes directly to helping grow the cash value. We pay the premium on an annual basis.
- We selected an aggressive mix of mutual funds; we expect to build a ton of cash value, so we needed to pick investments that would give her the best opportunity to grow the cash value over the long haul.
- We selected a variable death benefit. So, within the first year of her policy, the death benefit has already increased.
Uniform Transfers to Minors Act (UTMA) account – – this account was set up to serve as Jaslyn’s growth bucket. We currently have a mix of ETFs and growth mutual funds within this account. We will stay away from individual stocks for now, but we may consider adding some dividend-paying stocks or REITs in the future. 2022 wasn’t a great year for the stock market, so performance on this account wasn’t that great. However, the account balance grew because of contributions we made (primarily from cash gifts) into the account.
We initially opened the account with cash gifts to fund this account. My wife and I did nothing but collect those funds and allocate a small portion to start investing for Jaslyn. Then, we set up a small monthly recurring deposit into the account. This way, no matter what the market does each month, we constantly purchase more shares.
Authorized User – – we felt compelled to start Jaslyn’s credit history early. However, this is the only part of the plan I can’t give a full update on. I learned that to get a minor’s credit report, you must send a ton of documentation directly to each credit bureau. I didn’t make the time to do this. But I haven’t a doubt in my mind that baby girl’s credit report is stellar. We added her to a credit card we rarely use. We keep the card active, so we know all that positive reporting is trickling down to her.
I hope what TiYanna and I are doing for Jaslyn becomes the norm. There’s no reason why parents (or grandparents) can’t duplicate this plan.
We are not special. We are just two parents who are intentional about ensuring that our baby girl has a future of limitless opportunities.
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