Start saving for your child's future today with an NC 529 Account

This article was written for our sponsor, NC 529.

Most people know they need to save for their own and their children’s futures, but finding the means to do so is not always easy. In fact, a 2017 report by Statista found that just 20% of 30- to 59-year-old parents are putting away money for their kids’ college expenses.

That could spell trouble when those children graduate high school, since the average in-state cost to attend a public four-year institution is more than $25,000 a year, according to the Education Data initiative. Luckily, there are reliable and convenient ways to start saving.

Where to save

Saving money is a slow and steady process, and it shouldn’t require massive sacrifices if you start early. This is why the NC 529 education savings program was developed: to help people save the money they need for education expenses.

A tax-advantaged method of saving and investing for education, funds from an NC 529 Account can be used for educational purposes.

Takeila Hall, an NC 529 Regional Representative, has 23 years of experience working with people of all ages and income levels to save money for college.

“We have the opportunity to work with many individuals to educate them about the importance of preparing for educational expenses,” said Hall. “Anyone 18 or older can establish an account. Sometimes it’s adults who want to continue their own education; sometimes it’s people who want to start saving for their children.”

A 529 account allows money to grow tax-free; as long as it’s withdrawn to pay for qualified education expenses. According to College Foundation of North Carolina, these expenses include the following

College tuition, books, fees, room and board, and technology (such as a computer)

• Trade school programs
• Apprenticeship programs
• Equipment for those with special needs
• Student loan payments

The funds can be used toward public or private K–12 schools as well.

“When people think about saving, it is important to have a particular goal in mind,” said Hall. “When someone opens a 529 account, they’re making the decision to save money for educational purposes.”

How much to save

People who plan for future expenses may struggle to know how much to save in a 529 account — overall and out of each paycheck.

These numbers will vary among families with different long-term education goals. Parents and children can research how much it will cost to go to desired universities or training programs. These expenses go beyond tuition; families should find out how much they’ll have to save for room and board, books, supplies, transportation, and other needs, according to Investopedia.

“Most people are hoping to get scholarships and grants, and this helps bridge the gap,” said Hall. “It reduces the amount of future loan indebtedness.”

Federal financial assistance is one type of aid that can reduce education costs. Students should fill out the Free Application for Federal Student Aid (FAFSA) form to apply for grants, scholarships, work-study programs, and federal student loans. It’s important to fill out the FAFSA every year of college, rather than just the first year.

“We have a savings calculator on our website,” said Hall. “Our calculator allows you to determine how much you need to save to reach your savings goals.”

How to save

Once you know how much to save, it may still be difficult to find money in your budget to set aside. But Hall has a few ideas for redirecting money from typical spending into saving for college.

“I tell people to think about how often they go out for lunch,” she said. “It is easy to spend at least $10 or more each time. Making small sacrifices can mean big savings. Most people also enjoy going out to eat during the weekend. One way to save a few extra dollars each month is to eat at home. My family and I even make it fun by making our favorite gourmet meals. We cannot wait for the next creation.”

Additionally, if you get a tax refund, use some or all of it to add to your 529 account, said Hall.

“Instead of going to the movies twice a month, you can say we’ll watch movies from home today,” she said. “If you get a raise, bonus, or merit increase at your job, then you’re not taking from money you had; you can use the additional funds as a way to put money aside.”

This article was written for our sponsor, NC 529.