Things Are Tight, but Having Success Saving in Your 529 Plan is This Easy
Here at Send Your Kids to College we are dedicated to helping families succeed with the college experience. Planning for college can be stressful and this causes families to put it off until it’s oftentimes too late. You should always have The College Money Talk as soon as you can, to ensure everyone (especially your child) is aware of how this works. We hate to see students choose the wrong school, or miss out on potential savings. One trusty way to help get your kids’ college bill lowered is to begin contributing to a 529 plan.
It’s probable that parents have heard of a 529 plan, but you may not know all of the reasons why you should start one. We’ve talked about 529 plans here in the past, but today we wanted to focus on 6 key ways to ensure your 529 plan is successful.
Never too early to start.
Its typical for a family to consider their income to not be sufficient to open a 529 plan. Many don’t know there are ways to begin saving without breaking the bank. Don’t be afraid to get started with minimal contribution. The earlier you start, the further that little bit can go!
Consider “Found” money.
A financial advisor may be able to discover “found” money in your financial plan that you may not even be aware could be better serving you than another option. By taking a look at where your investments are, you may find that a particular account could be better off in a tax-free 529 plan to be used for your kid’s college tuition or books.
Set it & Forget it.
Like we mentioned in number 1, any contribution to a 529 is just that, a contribution. One way to help get you ahead is to create a recurring contribution in your checking or savings account. Making this contribution process automated can help you get to your savings goal earlier, and also will ensure you don’t skip any pre-planned contributions. Even $20-$50 withdrawn from your paycheck can help get you started.
Don’t Be Shy About Having a 529 Plan.
Explain to your child what the 529 plan is and why you’re opening it. This helps to make the process a team effort as your kid gets older. It has been said that students who are aware they have a college savings account are more engaged in their education. Be sure to tell family and friends as they may be more inclined to help donate to the college savings plan for holidays, birthdays and other special occasions.
Turn up the dial.
Start small, but don’t be afraid to turn up the dial a little every now and then. Each year you get a raise or if you switch careers and earn more income, consider increasing your regular contributions by 1% (or more)
You can authorize other individuals to be able to contribute to 529 plans, so remember to check in and review your account regularly. Always have an idea of how much of your portfolio is being allocated to your 529 plan and work with someone who is easy to communicate with. As your income changes, you may need to make adjustments to your portfolio, so make sure you trust who helps set up your 529 plan.
Starting a 529 plan isn’t too hard, but only if you totally understand the process. We highly recommend starting the college planning process for your child as soon as you can, to avoid disappointment and potential resentment from not having a solid plan in place. If you ever have any questions regarding planning college for your kid, don’t be shy! We are ready to help! Remember to follow us on social media for more tips and trends in college planning!