Open a 529 Plan
529 plans are the most common when it comes to saving money up for a child’s education. A lot of parents and grandparents use them, but the trick to making them really work is to start depositing money in at the earliest opportunity in order to make the most out of the interest rate.
You can typically open these accounts for as little as $25, but it’s recommended that you put money in it either on a yearly or monthly basis. Plus, the state government-sponsored program is tax-friendly! Not only will you be able to deduct your contributions from your state income tax, but your child. grandchild’s withdrawings won’t be taxed either.
Each state has a different plan, but you don’t have to pick the one for where you live if you don’t like it. Someone from Indiana can certainly put money into Idaho’s plan.
Remember, your contributions have to be consistent, too. Most families start these plans as early as when a child is born in order to amount 18 years worth of contributions. If you’re a bit late in planning all of this out, then you should start at your earliest convenience. It’s a good idea to nudge your budget around here and there in order to save money up for your loved ones!
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