Earlier this year, my family welcomed its newest member, a healthy baby boy. As other first-time parents can likely attest, it’s a life-changing event on many levels. New responsibilities, altered sleep schedules, changing diapers, and a whole host of different worries.
One worry I didn’t have to think about until now? Helping pay for college one day. College is expensive today and it doesn’t figure to be any cheaper 18 years from now. Hence my introduction into the world of 529 Plans.
For first-timers like me: What’s a 529 Plan?
In short, a 529 Plan provides two benefits:
1. Possible tax deductions for parents if they invest in an eligible 529 in their states
2. Tax savings on any earnings generated in a 529 plan assuming those funds are used for educational purposes
There are also a host of other benefits folks are starting to catch on to 10 hidden benefits of 529 plans (CNBC)
Where can one find more information about 529s? There are a number of resources out there:
· Map of State Plans (MorningStar.com)
· Top State 529 Plans (MorningStar.com)
· Saving for College: 529 Plans (NerdWallet)
· 529 Plan FAQs (Kiplinger)
While saving for a child’s college expenses is an important and worthy goal for any parent, don’t forget that it’s not the only financial consideration you might have. Make sure you consider other important goals like retirement planning, emergency savings, and home ownership to name a few. As always, consider working with a certified financial planner to make sure you have the most comprehensive plan possible.