Here are 3 tips to help turbo charge your 529 and save big for college:
1) Start saving before you have a baby!
When thinking about retirement, we all hear the mantra with you have to start saving early. When it comes to college savings, how about starting to save before you even have kids? You can open a 529 account in your name with yourself as the beneficiary because you have to enter a social security number. Then when you have a baby, just change the beneficiary to your newborn.
Let's take a look at a hypothetical scenario. Say you don't have a child until you are 32 so they start college when you are 50. If you started saving $1,000 per year when you are 20 years old and that money compounded at 10%, you will have accumulated over $198,000 by the time your child begins college!
2) Use credit card cash back with Fidelity
I'm a big advocate of using a credit card smartly. This means paying off your monthly balance in full each and every month; and not spending beyond your means. If you can do this, then I recommend the Fidelity Rewards Signature card as a good option for turbo charging your 529 savings. Earn unlimited 2% cash-back on every purchase with no annual fee. Using this card can help achieve your goals by funding your accounts through everyday spending.
3) Get your children involved by matching their contributions
I love the idea of getting your children talking about money and saving when they are toddlers. As they get older, it makes sense to engage children in the process of saving for college. This will help encourage good habits from early in their lives.
I also love this idea from Bill Cass of Putnam. He suggests setting up a matching program for your kids 529 much like a company matches employees 401k contributions.
As children earn money from chores, such as babysitting or yard work, ask them if they are interested in putting money into a long-term account to save for something special. Encourage them to save at least half of the money, and then you will match those contributions.
Do you have any tips to help save with a 529 plan? Share them in the comments below.