We all want the best for our kids, right? And we want them to not only have the opportunities that we’ve been given, we want them to have EVEN MORE. Could there be a better example of this than setting up a fund to help pay for their college? Maybe you just had your first child, maybe you hardly feel like an adult yourself (I have 4 kids, but I still don't really feel like an adult), but being an adult is really all about thinking about the future, right? Here's an alternate viewpoint on saving for college that might give you that motivation to get your butt in gear and start “adulting” when it comes to saving for your kid’s college fund.
And yes, it involves 529 accounts, but these are way more straightforward than you might think. More on that later.
Have you talked to any recent college graduates lately? It's a very different world for them. They're heading into their 20's and 30's with a huge disadvantage – their school loans. Don't believe me? Then you gotta look at some of these stats:
The financial burden on students has doubled over the past 12 years, and starting salaries for recent college graduates remains stagnant. This has a profoundly negative effect on this generation. Big life milestones like getting married, buying a house, and starting a family are being put off for several years.
As parents, we want to see our children succeed. Speaking for myself, I don't want to see my children burdened by debt at such an early age. I want to see them own their own homes and get married. While it's hard for me to envision grandchildren (since I still have a 2 year old), I know that I want to have grandchildren someday and I'd rather see my kids start to have these milestones in their 20's, not their 30's.
Having grandkids when I’m 50, not 60 is my motivation to start a 529 plan for my kids. I know that part of this motivation is truly selfish, but I’d love to live long enough to maybe even see some great grandkids. When you invest in your children's education, you might also get the added bonus of investing in your own legacy.
So let's get started! And there's good news here – it's VERY EASY. The 529 plan is the way to go. So what is so awesome about a 529 plan? Tax savings.
When you contribute money, you don't get a federal tax deduction in the current year. However, the funds can grow tax free so that when they are withdrawn, you don't have to pay any income tax.
But what plan should you choose? How do you sign up? And how much should you contribute?
I'll try to answer these below:
Now I bet you have some other questions… like:
Personally, I want my kids to have the best and a 529 plan can be a great tool to give your kids a leg up financially – which will allow your children to reach those milestones earlier in life.
This post was written as part of the Allstate Influencer Program and sponsored by Allstate. All opinions are mine. As the nation’s largest publicly held personal lines insurer, Allstate is dedicated not only to protecting what matters most–but to help protect your firsts and the moments in between. Share your firsts with #HeresToFirsts