The kids might be starting summer break, but that doesn’t mean that planning for college needs to take a vacation. May 29 is National 529 Day, celebrating 529 savings plans, like those offered by College Savings Iowa, that allow family members to help save and prepare for a college education with a dedicated savings account that can be funded by any family member, anywhere in the country. For less than the cost of a backyard BBQ ($25), families can start an account for their student at any age.
And just like any grillmaster knows the secrets to making delicious BBQ, a few tips can make families masters of college savings:
- Just like smoking ribs, college savings plans can work best by adding small amounts over time and letting compound interest turn investments into a war chest. Automatic investment plans (AIP) are a “set it and forget it” approach that helps families set up automatic contributions to a 529 plan on a regular basis by connecting their savings account with their financial institution. Already use an AIP? Consider increasing the contribution amount this summer. Even a few extra dollars a month could mean big savings when it comes time to write that first college check. Knowing that this set amount will be withdrawn automatically each month makes it easier to budget summer plans without sacrificing savings.
- Any good grill master knows that you have to check the heat every once in a while to make sure the meat cooks properly. The same is true for college costs. Keeping an eye on college costs through Net Price Calculators or other online tools can give families an idea of how much to save. Even families with younger students will benefit from reviewing current college costs as it will help start the conversation around college affordability. Iowa College Aid’s website offers profiles of all Iowa colleges and universities, including current tuition fees, books and other costs of living and also links to net price calculators for each school. Check it out here.
- The best BBQs offer a variety of sides to compliment the main course. When it comes to saving for college, diversification is just as important to successful planning. Focusing on individual portfolios instead of an age-based option may not factor in targets such as high school graduation and starting college. Think of it as making sure there’s enough potato salad alongside the coleslaw. Summer is a great time to revisit plans and determine any asset reallocation needed.
- Good BBQ should be bragged about. While no one’s saying that families should brag about their savings plans, making it a part of the conversation can create positive habits. Even at an early age, students who know about the cost of college will take their future education more seriously. Rather than make money a taboo topic, talking about the benefits of a 529 plan with friends and family is also a great way to encourage savings. Encourage them to open a 529 account for their own children or to give holiday and birthday gifts in the form of a 529 plan or even a contribution.
When it comes time to fire up the grill this summer, think about savings. Planning for your student’s future with a smart approach to savings is one of the easiest ways to make sure their college possibilities don’t go up in smoke.