Written by: Garrett Bohler, Wealth Manager
As families across the country prepare for another school year, back-to-school shopping often means buying new clothes, school supplies, technology and other essentials. This season can also be a good reminder to invest in something that lasts far beyond the first day of school: your child’s education.
One of the most effective ways families can prepare for future education expenses is through a 529 education savings account. A 529 account allows families to invest money today with the goal of helping pay for qualified education expenses in the future. Depending on the investment option selected, contributions have the potential to grow over time, giving families an opportunity to build education savings gradually rather than facing the entire cost when the bill arrives.
The biggest advantage of starting early is time. Even modest, consistent contributions can add up over the years. A parent might choose to make monthly contributions, while grandparents, relatives or family friends can also contribute. Starting with an amount that fits comfortably within the family budget can be more sustainable than waiting until college is approaching and trying to save a large amount at once.
Another benefit is flexibility. Education savings are not limited to a traditional four-year college. Depending on the circumstances and current tax rules, 529 funds may be used for qualified expenses associated with colleges and universities, vocational and trade programs, apprenticeships, certain K–12 expenses, books, supplies, room and board, and computers.
Back-to-school season is therefore about more than preparing for the year ahead. It can also be an opportunity to look further down the road. While families are checking off school-supply lists and planning for another year of learning, they can take a few minutes to review their education savings strategy, increase an existing contribution or open an account.
Investing in education is an investment in opportunity. By making education savings part of the family’s annual back-to-school routine, parents and loved ones can help turn small steps today into greater financial possibilities tomorrow.
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