There’s nothing like holding your newborn baby for the first time – the snuggly warmth, their tiny fingers, that sense that your world has suddenly expanded. But between those late-night feedings and diaper changes, many new parents find themselves thinking about the future, especially how to support their child’s education. They grow up fast, so it’s always better to start saving early.
One powerful way to start saving is through a 529 account.
What is a 529?
A 529 account is a tax-advantaged savings account designed specifically for education expenses. You can use a 529 account for a wide range of qualified expenses, including tuition, fees, textbooks, supplies, certain room and board costs, trade schools, and some apprenticeships.
Why Start Now?
When it comes to saving, time is your best friend. Starting a 529 account when your child is a newborn gives your money more time to grow. Thanks to compounding, even small, regular contributions can add up significantly by the time your child or loved one graduates from high school.
For example, saving just $50 a month starting at birth can grow to more than $20,000 over 18 years depending on market performance. That could cover a significant portion of college costs or fully fund a credential program that helps your child launch a career straight out of high school.
Easy to Open, Easy to Use
Opening a 529 account takes about 10 minutes online and doesn’t require a large upfront contribution. You can start with as little as $10. You’ll name your child as the beneficiary of the account, choose an investment portfolio, and set your contribution preferences. Many parents link their account to a bank or paycheck for automatic deposits – truly a “set it and forget it” option.
Get the Whole Family Involved
There are countless opportunities throughout your child’s life where you can tag family members and loved ones in on your savings journey – think birthdays, holidays, or other memory-making milestones. Encourage those siblings, cousins, aunts, uncles, grandparents, and family friends to contribute to your child’s 529 instead of (or alongside) toys and clothes. Many 529 programs offer a gifting platform with a shareable link, making it easy for family and friends to make direct contributions.
Flexibility for the Future
Even if it’s hard to imagine life beyond the terrible twos, let alone college, you don’t have to worry. The definition of “qualified education expenses” is broader than ever. No matter what your child’s future holds, funds can be used for 4-year degrees, community college, private K-12 tuition, career and technical programs, apprenticeships, and even up to $10,000 toward student loan repayment. You can also change the beneficiary
later to another child or family member if plans change.
One Step Toward Peace of Mind
Saving in a 529 account doesn’t mean you have to cover every penny of future costs. It simply means you’re giving your child a strong start and yourself a little peace of mind. Whether it’s helping with books and fees or funding a full semester of college, your efforts now will make a big difference later.
So, while your attention may be more focused on naps and tummy time these days, taking just a few minutes to open a 529 account can be one of the most thoughtful steps you take as a new parent.
