How to win at saving for college
Getting started saving for college is the hard part. Want to maximize your chances of saving enough for your child’s higher education? These five tips will help.
Automate: Automating your savings is probably the easiest and surest way to guarantee success. Set up your checking account to automatically transfer a manageable sum into your college accounts — it’ll help these accounts grow without any extra thought.
Invite others to help:
Let family members know that small contributions to 529s would make great birthday or holiday gifts. Most 529 plans have ways to accept gifts; plans operated by Ascensus have a neat feature called Ugift, a free service that lets account owners share a code with gift-givers, making it easy to send contributions. Also, some retail stores like Target sell 529 gift cards, though extra fees apply. Spend money, earn 529 cash: Upromise is a loyalty program where members earn cash back for shopping at retailers through its online portal, using its Upromise Mastercard, as well as dining at specific restaurants when you link a debit or credit card to your Upromise account. All money earned is shuttled into your 529 account. Fidelity’s 2 percent cash back credit card is particularly attractive for people with plans in the four states where it manages 529 plans — Massachusetts, Arizona, New Hampshire and Delaware — because you earn 2 percent back on all purchases, which is funneled back into your 529 account.
Employer help: A minuscule number of employers — 1 percent, according to the Society for Human Resource Management — will contribute or match your 529 contributions. So be sure to check if you’re one of the lucky ones. Check progress, but not too often: If you’ve already begun saving but think you haven’t made enough progress, there is a rule of thumb to help determine whether you’re on track to save at least a third of the cost: For an in-state, public four-year college, multiply the child’s age by $3,000; for an out-of-state, public four-year school, $5,000; and $7,000 for a private four-year college.