Tips for making a 529 plan workBased on the above principles, here are four tips for making a 529 plan work.
- Start early. College is expensive. The more years you can spread that expense over, the easier the burden will seem. This also gives your investments more time to help lighten that burden.
- Make contributions a monthly budget item. If your children's education is a priority to you, then make it a budget priority. Sacrificing some spending money every month will sting a little, but not as much as writing huge checks when your kids reach college age.
- Encourage family to direct gifts to the education fund. Especially in large families, kids are often overwhelmed at birthdays and holidays by more gifts than they can handle. Certainly, fun and games have their place in raising children alongside dollars and cents, but encourage family members to balance the toys with gifts to the education fund.
- Feature stocks at first, then start to scale back. Go for growth in the early years, then increasingly shift to savings accounts or similarly conservative -- and liquid -- vehicles as the time to use the money approaches.