Summer might bring a break from hitting the books, but doesn’t mean it’s a good idea to take a break from saving for college. Here are some ideas to help families check in on their college savings plans and tips in case they need to reboot savings strategies before heading back to school.
Have a check-up
Many families follow a “Set it and forget” philosophy when it comes to investing. While this is a great way to allow for slow, steady growth in college savings accounts, summer can provide the perfect opportunity to check what is going on with an account. Do investments reflect the goals and needs of a family the same way they did a year ago? Can a change in portfolio help achieve those goals faster? Investigating investment options once a year isn’t reactionary. Think of it as a doctor’s physical, but for finances.
If not already done, an automatic investment plan (AIP) can help make consistent investing in a student’s college savings portfolio easy. Just as summer offers a great time for considering which investments and plans are the most effective, the middle of the year also gives families a chance to tweak the numbers on their AIP and adjust their investments to any changes in their personal budgets.
Stay on target
While checking up on investments, families can also use the summer break to make sure they are still on track to meet their savings goals. Online calculators allow users to select a student’s current age, the type of school they are interested in attending and the college cost inflation rate (the average national tuition inflation has been between 6-7%). The results of these calculations can help families adjust their planning accordingly.
Spread the word
Summer is a great time for getting together with family. When the topic of school and your student’s future comes up, make sure to mention your 529 plan. Many relatives might not know that they can gift a student’s 529 plan directly with contributions, making for a perfect holiday or birthday gift.
By following these steps, families and students of all ages will be better prepared to build savings accounts that will help as college approaches, be it next year or years down the road.