By Lael M. Oldmixon, Executive Director, Education Trust of Alaska
As a parent, envisioning your child’s future and education journey is natural. After all, don’t we all have big dreams for our children? Still, the 18-year time horizon leading up to college or post-high school training can feel simultaneously daunting and far enough away that procrastination may derail best intentions. Here are a few building blocks to help keep you on track and pointed toward your end goal.
Start early
Starting early and making regular contributions can simplify and make goals more attainable. College can be expensive, and it’s easy to feel overwhelmed by the amount you’ll need to save. My spouse and I utilized a cost calculator when our children were still in diapers. We realized that getting to our aspirational savings goal would cost the equivalent of an additional monthly mortgage payment (spoiler, that was extra money we didn’t have at the time). At that point, we reassessed the goal. We kept saving what we could, incrementally increasing as our kids graduated from diapers to big kid clothes, trikes to bikes, and little plastic sleds to skis. Soon, our oldest will enter high school. And because we’ve saved incrementally over the past 14 years while benefiting from compounding tax-free interest, the remaining amount we hope to save seems entirely manageable.
Save often
It’s not a new concept, but following the keep-it-simple approach, saving even small amounts systematically over a long period of time can add up in big ways, especially when using a 529 education savings plan. Systematic saving is a strategy where you set up automatic contributions to your 529 plan. This method is also known as “set and forget it.” This way, you won’t have to remember to make monthly contributions and are less likely to spend the money on other expenses. When our kids were little, my husband and I invited family members to support our savings goals by using Bill Pay from their bank for small $25 monthly contributions and gifting tools for birthday or holiday contributions.
Focus on the building blocks
Saving for your child’s college education is an important financial goal that requires careful planning and dedication. And it doesn’t have to be hard:
- Open a 529 education savings plan.
- Take advantage of systematic savings.
- Save what you can now and increase your contributions as you graduate from other expenses like diapers and daycare.
- Keep a long view of your goals.
- Small contributions can make a big difference over time.
- Start saving today, and you’ll be one step closer to achieving your goals.
Be flexible
The last bit of encouragement I’ll leave you with, dear reader, is that life can get in the way of the best-laid plans. So, don’t beat yourself up if you have to pull back on the amount or frequency of your contributions. Celebrate every penny saved and try to stay on course by saving something each month, even if it’s a little bit. It all adds up.
About the author:
Lael M. Oldmixon, M.Ed is the Executive Director of the Education Trust of Alaska, which offers Alaska’s three 529 plans: Alaska 529, the T.Rowe Price College Savings Plan, and the John Hancock Freedom 529. She lives in Alaska with her spouse, two children, and two dogs.
By Rodger O’Connor, Associate Director for Marketing & Communications, Washington State’s College Savings Plans (WA529)
January 16, 2024
It’s January, which means football everywhere you look, on seemingly every channel at all hours of the day. There are college football bowl games, pro football games, football game replays, and even shows discussing nothing but fantasy football. If you’re a fan, it’s glorious.
But even if you’re not a fan, there is still a great reason to watch football: There is so much you can learn about college savings.
Wait, what?
OK, stay with me here. There are dozens of similarities between the game of American football and financing your student’s future education. You might have to squint your eyes and turn your head sideways a little for them to become clear — but I promise, they’re there. Starting with the most basic:
Make a game plan
Before they take the football field, good coaches make a game plan. They study the opposing team and devise a plan to maximize success. This is also important with education savings. Think about how much you want to put away for your student and how much you can afford to set aside each month. But don’t be afraid to change your approach if your student’s plans change. Even the best coaches need to call an audible once in a while.
Mix up your playbook
If a football team ran the same play every time they lined up, their success would be limited. Similarly, your savings strategy shouldn’t be one-dimensional. In addition to setting up monthly contributions, consider ways to boost your savings when opportunities arise. For example, consider socking away a portion of your tax refund or invite family members to make gift contributions for special occasions. You can also diversify your investments. If your state offers both 529 prepaid tuition plans and 529 investment plans, saving with both types can be a great strategy. A prepaid plan provides peace of mind, while the investment plan can potentially reap greater returns. If it looks like your savings plan may fall short of the goal, don’t panic. Many families successfully add to their savings playbook by applying for scholarships, grant aid, and guaranteed student loans to augment their savings.
Don’t depend on the Hail Mary play
Many successful football teams patiently build long scoring drives. Starting your savings plan when your student is young allows you to take your time. Putting away a little at a time for many years is not only easier on the monthly finances, but it also might prevent you from having to throw it deep in the last minute of the game. Begin when they’re young, be patient, and chip away.
Celebrate your win!
When you successfully build and execute a solid education savings game plan, you and your student can both end up enjoying the spoils of victory. Few things in life are sweeter than graduating debt-free! Now get out there and start saving!
About the author
Rodger O’Connor is Associate Director for Marketing & Communications for Washington State’s College Savings Plans (WA529), which includes the GET Prepaid Tuition Program and the DreamAhead College Investment Plan, Since 1998, tens of thousands of students have used more than $1.5 billion of their WA529 savings to attend colleges in all 50 states and at least 15 countries worldwide.