When our first child was on the way, my husband and I started looking into saving for college for our baby. Yes, we started early. I was and still am daunted by the cost of college and how to save. As it turns out, figuring out the process isn’t so bad. Coming up with the money is the more challenging part! We chose a 529 plan, which means the earnings are tax-free as long as it’s used according to the rules set up in the tax code it’s named for. This type of saving was all new to me, and I’m certainly no financial expert. But here are a few things I picked up along the way that may be helpful to other parents who choose to go the 529 route.

It gives family and friends a place to put their money (instead of toward more toys).

As a parent-to-be, I feared becoming overrun with kid stuff. Yes, that happened anyway. But I shudder to think how much more stuff we would have if we hadn’t suggested a college fund donation when family and friends asked what they might gift our kids for birthdays, Christmas, baptism, etc. Think even as early as your baby shower!

You can set up a 529 plan before your child is born.

Yes, it seems strange, but it’s possible. And beneficial — see above. The first roadblock was that our little fetus had no social security number. But you can set it up in one parent’s name, and switch it out once the baby arrives and has a social security number. Or just wait until the baby comes. Either way, the earlier you start, the more time your money has to grow.

You don’t have to invest in the 529 plan for your state.

Many states offer 529 college savings plans. Like many investments, you can choose based on performance, fees, and other benefits. You’re not locked in to a lesser-performing plan just because of where you live. We checked other states out and picked one that made sense for our family. 

The money can be shared among kids.

Even though you open a 529 plan for a specific person, you can use it for other kids or even for yourself. This is nice to keep in mind in the event your child chooses a path other than college or earns a scholarship. You can even use it for the degree you never finished or for graduate school for yourself.

Saving money for college is hard.

While pregnant and when our first child was an infant, we made regular deposits to the account. Once our second child came along, it got harder. Everyday bills, daycare, mortgage, retirement, and unexpected expenses all seem to take priority. We send money when we can. But we love how donations to our kids’ college funds have become a regular birthday and Christmas gift from grandparents and great-grandparents!

 

Teresa Kett
Teresa has lived in the Boston area for nearly 15 years, but remains surprised each winter when that first really cold day takes her breath away. She's most likely to be found snuggled in a blanket with at least some of these things -- books, a newspaper, a tea latte, a glass of wine, her kids and her New England-native husband who can't be convinced to move south. She lives in the Boston suburbs and dreams of a someday when she can spend the winter with her toes in the Florida sand she grew up with. Until then, she's enjoying raising kids who will tell anyone who asks, "We cheer for the Bruins, the Red Sox, the Patriots and the Florida Gators." As a former journalist who changed careers when she moved north for graduate school, Teresa is excited to return to regular writing as a Boston Moms Blog contributor.