Simple Ways To Save for College
Lucy is only eight years old but I know we need to start a savings plan for her for her college education.
Here are some simple tips to help me and all of you get started doing just that.
1. Save in the right place.
529 savings plans were designed specifically for saving for college. They are tax-advantaged programs created to help families like yours save for a child’s future education expenses. Assets grow tax-deferred, so your earnings can potentially go farther than in a similar taxable vehicle. When the student is ready for school, the account owner can withdraw the assets tax-free1 for qualified higher education expenses: tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance, and certain room and board costs.
2. Start early.
Parents of teenagers already know this, but college comes in the blink of an eye. It is never too early to start saving and help offset what you need to borrow later.
3. …but it’s never too late, either.
Even when students are ready to head off to college, they can benefit from last-minute savings. Money invested in 529 plan accounts can be used for books, required fees and equipment, and many other college-related costs, so having those tax-free earnings available for qualified expenses can be a help.1
4. Enlist friends and family.
Inviting third parties like grandparents and friends to contribute to a child’s 529 plan is a great way to boost your savings. Ugift is an online tool that allows account owners to email an invitation to make a gift contribution to college savings for birthdays, events, or just as a reminder that college savings is part of your plan.
5. Saving little by little makes a difference
Adding small but regular amounts to a savings account over time gives investments more time to grow. 529 plan accounts offer automatic investment plan options that allow investors to have amounts deducted automatically from a savings or checking account on a regular schedule, generally monthly or quarterly.2
6. Teach your children well
One of the most daunting challenges in preparing for higher education costs is a common lack of knowledge. Encouraging financial literacy for all phases of life, including saving for college and beyond, will give a significant boost to the next generation.
7. Think outside the traditional college box
Higher education is not limited to our notion of a tradition four year university. 529 plan savings can be used for technical or vocational schools, community colleges, and graduate programs, as well. Savings strategies can extend beyond children to adults who are thinking about retraining or advanced degrees.
For more information on 529 plans, please visit www.529.com.
Tips courtesy of: Liz Robinson, Vice President of Upromise Investments