By Tim Gorrell, Executive Director, Ohio Tuition Trust Authority
February 1, 2018
Is one of your New Year’s Resolutions saving more money for your child’s future college costs? Here are some simple steps that can boost your 529 college savings plan.
- Build Your Savings With Automatic Contributions
Start off with an easy first step: automate your savings. Many financial experts — and many 529 account owners — say the simplest way to save is set up regular contributions to your 529 plan before there’s an opportunity to spend it elsewhere. You can schedule your automated 529 deposits to match your paydays or set a monthly contribution.
- Build Your Savings By Depositing Your Tax Return
If you receive a tax refund this year, consider depositing it into your 529 college savings plan. You may be surprised how this one yearly contribution can build up your 529 account over time. Many account owners will also contribute a portion of an annual raise or bonus towards a 529 plan.
- Build Your Savings With Disappearing Expenses
When your children are young, it may be difficult to find money in your budget to save in a 529 account. During this time, take advantage of free college cost calculators to determine your long-term college savings goals and compare 529 plans by features or by state. After exploring your options, set aside what you can afford now and add disappearing expenses later to your contribution.
What are disappearing expenses? They are those temporary costs in your family’s budget. Preschool is a large disappearing expense. If your child is starting kindergarten this fall, transform those former day care or preschool costs into regular contributions to their 529 account. Those dollars you’ve prioritized for pre-K education can then support your child’s college education.
Other disappearing expenses include paying off a car loan, medical and credit card bills, or even your own student loans. As you know, it’s far cheaper to save now than pay off loans later.
- Build Your Savings With Help From Others
Start a conversation your loved ones about giving the gift of college by contributing to your child’s 529 plan. Gift givers want to share gifts that have a positive impact; what can be more meaningful than the gift of a college education? Gift givers don’t have to give big to add to most states’ 529 plans.
To learn more about 529 plans, visit the resources available at the College Savings Plans Network. Even small 529 plan deposits can grow through the power of compound interest and time. If you haven’t started a 529 college savings account, start now. If you have been saving in a 529 plan, take these additional steps and watch how your account grows.
Tim Gorrell is the executive director of Ohio Tuition Trust Authority. For more than 25 years, Ohio Tuition Trust Authority has sponsored and administered CollegeAdvantage, Ohio’s 529 College Savings Program. CollegeAdvantage oversees more than 636,000 accounts and over $11.3 billion in assets. Visit CollegeAdvantage.com or call 1-800-AFFORD-IT (233-6734) for more information.