Doing This Before Your Kid Turns 4 Could Add an Extra $22K to Their College Fund
When it comes to your kid’s college savings fund, you probably feel like you’re not doing enough.
You’re not alone. Many parents feel like they’re falling behind, worried they’ll leave their child to flail in student loan debt like they had to (or might still have to).
This isn’t something you want to put off. The sooner you start, the more you’ll save, especially if you use a 529 savings plan. It can grow your money a whole lot faster than a regular ol‘ savings account.
But what exactly is a 529 savings plan? Why are there so many options, and how do you choose? Do you need to hire a financial adviser? And what about the fees?
Thankfully, the U-Nest app takes all the guesswork out of college savings. It’ll match you with the best plan, based on your needs. Then it takes all of five minutes to set up an account. Plus, it costs just $3 a month. No complicated fee structures, no lengthy paperwork, no in-depth research required.
Better yet: It could help you save $22,000 more for your kid’s college — without you contributing a penny more.
How a 529 Plan Could Help You Stash Away An Extra $22K
If you don’t know what a 529 plan is, it’s a tax-free college savings plan. That means you don’t pay taxes on the money you contribute, and when you take the money out, it won’t get taxed if you use it for educational expenses. Plus, it’s an investment account, so the returns tend to be quite a bit higher than a savings account.
Running a hypothetical plan will help you see the financial benefits. (We used the U-Nest calculator for this.)
Let’s say your kid is 4 years old, and you contribute $250 a month to a U-Nest 529 plan. By the time your kid is 18, you could have more than $60,000 stashed away, ready to use for college or trade school tuition (even private high school fees), housing, books and/or a new computer.
That’s $22,000 more than you’d have if you had contributed the same amount to a typical bank’s savings account, which would have a little over $40,000 in it.
Now, the tricky part can be finding a plan that works best for you. Each state offers 529 plans, but you don’t have to stick to your state’s plan. Before we start fretting with all the logistics, that’s where U-Nest will help.
Find The Best 529 Plan For You, Your Kid and Your Wallet in 5 Minutes
Traditionally, 529 plans have been a bit tricky to navigate. It involves shopping around and picking a plan, filling out paperwork, choosing investments and funding the account. There are a lot of decisions involved, so some parents just consult with financial advisers, who come with fees.
Thankfully, U-Nest has streamlined this process.
All you have to do is download the U-Nest app, fill out some basic information, and U-Nest picks the best savings plan based on your child’s age and the money they’ll need. From there, you’ll set up your monthly deposits; you can start with as little as $25 a month.
And, hey, by taking just five minutes to do this, you could be saving an extra $22,000 for your kid’s education, thanks to those sweet tax advantages and returns. Not bad, right?
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder.