This week I opened a new 529 account for Samantha. For all you new and prospective parents, a 529 is a way to save tax-free for your child's college costs. I won't bore you with the details, but I will say that opening a 529 is a no-brainer if you want to start a college fund. There are many investment options, but if you use your state's program you might be able to deduct your contributions from your state income taxes. We had a Michigan-based 529, but we're moving to the Virginia plan for obvious reasons.
We've put very little money in the fund because we believe Sam should be primarily responsible for her own college costs, if she chooses to go to college. But we have a credit card through this Futuretrust program, which deposits 1% of our spending into the 529. This way, we can help Sam out a bit with no pain at all. When we are financially comfortable, we put a little bit in each month on top of that, and we've also received gifts for her that went into the account. All those little bits have added up nicely.
If you want to find out more, try bankrate.com, my go-to web site for everything financial.
My wife and I paid our way through college and it was a terrible struggle, but we are better for the experience. We could probably afford to pay for our kids' education but honestly why would college for our adult children be our responsibility?
ReplyDeleteWe'd like to help them out, as you indicated, but we haven't decided how to go about that in the most appropriate way. We are currently thinking that we'd like to use that savings to pay down (or off) their debts as a graduation present. It would be unexpected, which means they won't count on it so they'll work their butts off to get through college as quickly and cheaply as possible, and they'll have a nice start when they enter their new careers.
As my children are all under 6 at the moment, we have plenty of time to save and plenty of time to decide how best to provide the help.
Oh, and we went with Upromise because you can link your debit card to it and so can anyone else who wants to participate.
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