It’s never too early or too late to save for college. Here are four tips to help bump up your college savings accounts before the end of the year.
Tip 1: Find Loose Change (and Many Dollars) in your Checking Account
Review the automatic payments connected to your checking account and cancel those services and subscriptions you don’t regularly use or need. Imagine finding an extra $75 per month – just by tidying up your checking account. But before going to spend the extra money, consider reallocating at least some of it to college savings. Every little bit helps. This repurposed “found money”will have little or no impact on your current spending or lifestyle. How much can you find?
Tip 2: Give the Gift of College
2018 was a breakthrough year for 529 plans with average account balances growing to $24,153. Along the way we have seen innovations to help simplify the savings process. The College Savings Foundation reports that 90% of parents said online and other gifting options would make college savings easier – and their wish has been fulfilled:
- Your 529 Plan’s website likely has online gifting, gift certificates and coupons that can be printed and presented as gifts – with the gifted amount automatically deposited into a 529 account.
- GiftofCollege gift cards can be purchased online and at select retailers including Target and some Barnes and Noble locations.
- More and more employers are offering programs to direct deposit into 529 College Savings Plans.
The gift of college savings is such a meaningful gift that makes everyone feel good and investing in education reaps lifelong benefits.
Tip 3: Use Credit Card “Cash-Back” Rewards to Fill up 529 Plans
Find a credit card linked directly to 529 plans or be disciplined about depositing cash back rewards from other cards into a college savings account. The great thing about these programs is that they allow you to fill your college savings without altering your normal spending habits: no behavioral changes are necessary. Some credit cards are directly linked to college savings programs to permit users to deposit cash back rewards directly into 529 accounts.
These articles provide more details:
- Credit.com named several programs with rewards for 529 college savings plans.
- The New York Times Money Advisor: “Using a credit card to save for college”
Just be sure to avoid rolling-up big credit card bills that you can’t pay in full each month. Avoid paying big interest charges that will easily wipe out the amount you have saved.
Tip 4: Crowd Fund College Savings with Friends & Family
Taking the journey towards savings does not need to be a solo trip – share these tips with friends and family and they will help grow college savings. Grandparents, aunts, uncles and friends can all help your family realize the dream of college. Although not many have trouble with this,remember the maximum annual contribution without encountering gift taxes is$15,000 per individual ($30,000 for joint filers). As mentioned in our prior article, there is a special 5-year accelerated gifting rule for 529 savings accounts, permitting up to $75,000 ($150,000 for joint filers) to be contributed in a lump sum to a 529 plan in one single tax year, but no subsequent gifts can be made over the next five years. It’s worth checking with a tax advisor to know all of the details.
These tips can help you maximize college savings by taking a few simple steps that won’t affect your lifestyle. The most important piece of advice: get started today, because “Saving a dollar today is better than borrowing one tomorrow®”.