There is no question, 529 College Savings Plans are an exceptional savings tool when it comes to a child’s education expenses. One question does often come up when discussing this account type with our clients, “How much should we be funding our 529”? While this question can be complex, with an intimidating answer, the best answer is usually, contribute what you can. Don’t fret if you’re unable to cover the entire estimated college expenses, every little bit helps. I can say that from personal experience, your student should be and will be grateful for any help received. Here are some tips on contributing to 529s.
1. Start making contributions as soon as you can.
One of the biggest benefits to take advantage of when saving for college is starting early. The earlier you start contributing, the longer earnings will compound and the more money you’re likely to have when your student starts school.
2. Set up automatic monthly contributions.
By setting up a recurring automatic contribution, you’re more likely to stay on track with your goals. You don’t have to break the bank every month to make contributions. Contribute what your budget allows, whether that be $10 or $100, whatever you are comfortable with. As I mentioned earlier, every little bit helps when it comes to college savings.
3. Encourage friends and family to contribute.
As parents, while we are grateful, we sometimes dread the mass amount of toys our children receive on their birthdays and various holidays. Just think of the contributions that could have been made with the dollars spent on those toys; a pretty penny! Many family members and friends don’t know that it’s an option to contribute to a 529 that isn’t owned by them. Give them the option! Many 529 programs have tools that make it easy for extended family and friends to make contributions to your student’s future.
As we conclude, I’ll leave you with a final piece of advice, never sacrifice your own retirement to fund a child’s education. Remember that saving for education is not just about the financial aspect. It’s about investing in the future of your loved ones and providing them with the tools to chase their dreams.
As always, if you have any questions or need further guidance, don’t hesitate to reach out to financial experts and resources available to you. Here’s to a brighter, more educated future!