This is a guest post from FCU's Financial Advisor, Ken Toops.
When you’re saving for college, it’s important to put time on your side.
For most, college is a time of exciting but nerve-wracking experiences: moving away from home, entering the real world and, of course, facing new expenses like tuition and board. Having a solid savings plan for your child's education is vital to being prepared for these new expenditures. A 529 plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code, which created these types of savings plans in 1996.
The earlier you start, the better -- and the more you contribute to a 529 plan early, the more compounding you can take advantage of to build college savings. Education planning can never start “too early.”
The key is to contribute early and often to your 529 plan. You’ll need to, for your child’s sake. Historically, college tuition has increased at about twice the rate of inflation -- about 8% per year on average. That means the cost of college doubles every nine years.
Are you saving for college with that reality in mind? Remember to make regular monthly contributions to your child’s college savings plan. A 529 plan is truly an investment in your child’s future, and really, what investment could be more important?
Have a question for Ken? Let us know in the comments below!
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