You’ve got too much on your plate. It’s ok to admit. You’ve got a mortgage, credit card bills, living expenses and just had your first child. You’re supposed to be saving for this thing called retirement, which seems as likely at this point as walking into your closet in the morning and ending up in Narnia. Everywhere you turn people are telling you that you need to save for your kids’ college education, which is ironic because you’re still paying off your own student debt. But take a deep breath. No one said you had to go this alone.
Everyone knows college is getting more and more expensive. 529 Plans are great because they offer flexibility. One of these flexible attributes is to allow anyone to contribute to an account at any time. There are even rewards programs and credit cards that can give your account a boost. Of course, you should still do your own saving, but don’t be shy to tap other resources. Here’s some easy ways to rack up some extra cash in your 529 Plan account.
Ask Family and Friends for Donations
Consider asking those who would normally give a present during special occasions for donations to your child’s 529 account instead. You’ve got birthdays, baby showers, holidays, graduations and other occasions to make such requests. Your child probably won’t understand the concept of compound interest or the importance of their 529 account, so it might be prudent to get a small physical gift still just to prevent a scene.
However, this is not always as easy as it sounds. Beyond the task of asking people for donations, the very act of donating to an account can be a pain. Often times plans will require non account-owner contributors to go online, print a contribution form, and have them mail a physical check with the account number on it. But sites Giftedpath.com are here to help. Simply, link your 529 account to a webpage dedicated to your child and let anyone contribute directly into the account with ease.
Get a Upromise Account or Rewards Card
Upromise is a rewards program which has helped its members save over half a billion dollars for college. It’s free to join and you can receive earnings for spending money at places like BestBuy, Macys, grocery stores and thousands of restaurants. Invest your earnings in a 529 Plan, pay down a student loan or deposit the money in a high-yield savings account. You can also apply for a credit card that rewards your purchases with cash back that can be placed in your account.
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Reinvest Your Tax Deduction
Currently, 34 states and the District of Columbia offer their residents some sort of tax incentive for contributions to a 529 Plan. Although you usually have to use the state’s plan to get the tax benefit, 6 states (Arizona, Kansas, Maine, Montana, Missouri, Pennsylvania) offer a deduction for contributions to any state’s plan. Instead of filing your taxes and spending your refund on a trip, calculate the amount your deduction will save and reinvest it in your plan. Let’s say your deduction saves you $100 a year in taxes. Reinvesting that into a plan every year for 10 years with a 6% annual return can net you over $1000 in additional earnings.
Tell Your Children About Their 529 Account
Instill the value of an education in your children at an early age. They might surprise you and be motivated to save some of their own money from babysitting or mowing the lawn in their 529 Plan. You can also make a deal that you’ll match whatever they put in. Having some skin in the game is never a bad idea.
A school that costs $80,000 in today’s dollars might ended up costing you over $200,000 in 18 years. That’s a staggering figure. Not many people are going to be able to save for the full cost of college alone. As you can see, there are options out there to help weather the storm that is saving for college. Best take advantage of them because every little bit helps.