A recent change for us is we have established 529 plan account for college savings accounts for our daughter. Long ago my goal was to set aside ~$5k at the birth of my kids, but so far we have roughly $1,800 set aside for our daughter’s tuition in these accounts.
I have been internally debating about whether I should include these accounts in our net worth. On the one hand they are definitely assets (although restricted) that technically could be liquidated for some value if we needed to. However the intention of this money is to pay for our child’s education. I think of it as a sunk expense.
For now I have decided to leave these off our net worth statements. The intent of the net worth statements is serve as a measuring stick towards our financial goals. Our financial goal is a net worth of $2 million to reach our financial freedom. The idea being we should be able to roughly generate enough cash flow from $2 million in investments to live off of.
I believe its better to recognize these 529 accounts as gifts to our daughter and leave them off the measuring stick for our financial goals. What would be your approach?
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