Maybe this will date me, but growing up, if I ever got money as a gift, my parents would save it. They would then use that savings to buy me savings bonds. These were to be cashed in when I was ready to go to college. When I turned eighteen, I cashed what I had. I was able to use it towards my first year of school.
Savings bonds are kind of old news, but when considering starting to save for my kids’ schooling, I initially started savings accounts to deposit any gifts they received and started to deposit amounts each paycheck.
About a year ago, my sister and I were talking about this. She is much savvier when it comes to savings and investments. She told me about how she opened a 529 plan for her son. I started to do some research and there are a lot of options out there, one being the Minnesota College Savings Plan.
Compared to a regular savings account, I felt like this would work best for my kids. I am able to put funds away and help it grow by choosing mutual funds offered by the plan. Outside of the standard mutual fund fees, I am able to grow the funds tax-free in the plan. Hopefully, I will continue to build the balances so that my kids will be able to use it towards school. We also went this route because once they are in school, the funds can be withdrawn tax-free if it is used for qualified schooling expenses including room and board and books.
September is College Savings Month, so now is a great time to think about opening an account for your child! You can find a plan that can be opened easily with as little as $25. Even saving a small amount per paycheck can really make a long-term difference. I always thought I needed a larger sum to get something like this started. I kept pushing opening the account back to a later date. Now, I feel confident that beginning this type of plan now is the best decision for my kids. They are younger so we have more time to build their accounts up to prepare for college. Little by little, the funds are adding up!
As a parent, I want to help my kids be the best they can be. I also want them to be comfortable in school without large loans and debt, which is such a huge concern for many parents right now. I think starting a 529 plan for my kids as early as possible has been the best decision for us to ensure we can help support them through college.