With a job market that has never been more competitive, the importance of a secondary education, whether from an Ivy League school, a public university, or a vocational culinary academy or carpentry program, has never been clearer. And it’s never been more expensive.
That’s why, if you’re a parent, grandparent or are just looking to help fund a loved one’s higher education dreams, the sooner you start saving, the better. This also applies to students looking to pay their own way.
To help spread awareness of the importance of saving for secondary education in its many forms, September has been declared National College Savings Month. Continue reading for tips on how you can jumpstart your college savings, as well as other ways to get the most from College Savings Month.
Know what you’re saving for
If the student you’re saving for is in middle school or above, talk with them and try to gauge what kind of secondary education they envision for themselves. What are their goals? Are they leaning toward a specific career? The traditional college track is not for everyone. For some, starting at a local community college before transferring to a four-year institution is the smarter, more affordable, choice. And a growing number of students are consciously choosing to forgo the college path altogether in exchange for training at a vocational or trade school. These schools focus on job skills that students can put to use immediately upon completion of the program.
The point is, having an open conversation with the student about their actual goals can help determine exactly how much you should set aside.
Save early and often
We said it in the introduction but it’s worth repeating: The sooner you start your college savings, the better. Every dollar you set aside now is a dollar you won’t have to come up withonce the student starts their secondary classes. And starting early will enable you to save more, especially if you commit to making regular contributions. If possible, set up an automatic deposit to transfer money into your college savings account every pay period.
Open a 529 College Savings Plan account
In a manner similar to how the Individual Retirement Account (IRA) revolutionized retirement savings, 529 College Savings Plan accounts have brought important new advantages to saving for college. Here are the top three advantages of these popular accounts:
- Substantial tax benefits: Contributions grow tax-free, and withdrawals are tax-free if used for qualified expenses.
- High contribution limits: 529 plans allow you to save up to $400,000 per student for education expenses.
- Generous flexibility: 529 plans offer flexibility in terms of investment options, beneficiary changes, and can be used to pay for a wide range of education-related expenses at accredited colleges, universities and vocational schools, as well as student loan repayment.
Take advantage of “bonus” cash
When unexpected money comes your way, whether in the form of a commission or performance bonus at work, or a higher-than-expected tax refund, take advantage of the opportunity to set a portion of them aside. Go ahead and splurge on a nice night out or a special purchase you’ve had your eye on if you want, and pay down some existing debt, but then make sure to put a significant portion of the money that’s left into your college savings account.
Give a newborn new hope for their future
Did you know that babies love to make their debut in September? According to Reader’s Digest (https://www.rd.com/article/september-popular-birth-month/), nine of the 10 most common birthdays are in September. There’s no better way to welcome a new life than by investing in his or her future with a college savings account. Unlike a onesie or baby booties, a college savings account will actually grow with the child rather than find its way into a pile of outgrown clothes after a few months.
We’re here to help
Getting started saving for college is the hardest part. If you’d like to discuss starting a college savings plan, call or come into your local CB&T branch today.