Today I’m excited to bring you a post all about one of my favorite subjects, saving for college. You know it’s one of my favorites because I have a whole page about it here. Bonus – this post is being brought to you courtesy of my states 529 plan, CHET – the Connecticut Higher Education Trust.
First, I’ll talk a bit about some general college savings information, and then I’ll share some of the awesome benefits of my states plan. Even if you don’t live in Connecticut, I know you’ll find this interesting and informative – so stay tuned.
You’re going to leave today educated, inspired to check out your own states benefits (don’t worry, I have an awesome resource for you), and wanting to share this with any friends, family, or followers that might live in CT.
Saving For College – The Basics
Saving for your kids to go to college can seem like an overwhelming, daunting task. Or if you have a small child or a baby, you might think there’s plenty of time and it’s something you can just do “later”. Well it doesn’t have to be as overwhelming as you might think – and by starting early and saving often, you can make a big dent in those college costs.
Start early, save often –Â When investing for the future, start early and save often is the recipe for letting compound interest do a lot of the heavy lifting for you. The sooner you start investing, and the more often you put money aside, the longer that money has to work for you.
Start where you are – I often hear people saying they think it’s “too late” to save for college. Or since they can’t save a lot, they think it’s not worth trying. I’ll tell you that it’s never to late, and saving what you can is better than nothing at all. You start small by setting up a $25 per month (only $5 per week!) deposit into a college savings account. Even if you can’t save hundreds of thousands of dollars, any amount set aside will be helpful.
Make it a family affair – For birthdays, Christmas, and other special occasions why not ask for the gift of college, rather than a toy that will break in a few weeks? Every year for my three boys birthdays and Christmas, I will send an email with a link to give a gift of college savings. They really appreciate it – especially the 14 year old, for whom college is very near term – and it’s a great option for kids. Our state is even selling gift of college gift cards now!
As kid(s) get older, get them involved – I do this with my older two boys (not the two year old, obviously). I have a chart in my kitchen that I fill in every so often, showing progress toward my college savings goals. Part of why it’s there is so I can show it to the boys, and talk with them about college. They both know that saving for college is an important family value, and that it’s something we work hard at.
Use a tax-advantaged savings account, when available – 529 plans are a great option that grow tax-deferred and are tax-free when used for college expenses. Some states, like Connecticut, even offer state tax savings!
Set up direct deposit – One great way to save for college is by automatically saving every single month, like a bill. Similar to having your bills automatically paid every month, you can have your college savings automatically taken out every month. Since it’s automatic, you don’t need to remember to make a contribution!
Review investments once year – Every year you’ll want to check in on what your investments are doing, and see if you need to make any adjustments. As your kids get closer to going to college, you’ll probably want to make sure that you’re adjusting the investments so you don’t take as much risk as you once did.
CHET Baby Scholars – Amazing Offer
In my state, the Connecticut 529 plan has a great benefit for new parents through birth or adoption. It’s called “CHET Baby Scholars“.
If you open a 529 before your baby is a year old, or before the first anniversary of your adoption, you get two amazing benefits:
- $100 deposit – just for opening the 529!
- Another $150 match for money deposited before the baby is four years old, or the fourth anniversary of the adoption
That means if you open an account with $150, you get another $250 from CHET! How great is that.
Sadly this great program wasn’t available when my older two sons were born, but it was when the little guy arrived. And of course I took full advantage of it, opening his account with $150. That match meant that my $150 contribution turned into $400 – just like that! If I assumed the investment returned 7% on average over the next 18 years, that $400 will more than triple into $1,352. Is that enough to fully pay for college? No, but it’s a great start for a $150 contribution.
CHET Advance Scholarship
No babies? No problem. CHET also offers something for high school students.
Three words – CHET Advance Scholarship.
This is a scholarship offered to high school freshmen and seniors, with 200 randomly drawn winners (100 from each age group).
The freshman win a $2,000 scholarship with the potential for an additional $500 match if you save $500 in CHET, and seniors win a $2,500 scholarship! Talk about awesome. How do I know this is so awesome? Well, my oldest son, a high school freshman, actually won this past year.
I found out about the scholarship from creating this round-up post of 529 giveaways by state. I put a reminder on my calendar to check the site at the end of August when the contest opened. I had my son fill out the application, and *bam!* he won! We got to go to an awesome ceremony at the state capitol, and photos both with our state treasurer and the other winners. So if you have a child who will soon be a high school freshman or senior, be sure to mark your calendar (and bookmark this post) to check back at the end of August and enter!
Tax Savings
What might the other benefits of using CHET be for Connecticut residents? Well, how about a tax deduction?
If you live in the state, you can deduct $5,000 per year for individuals (single, head of household, married filing separately), or $10,000 per year for married filing jointly. You can divide up the contribution between your kids however you want, but only get a deduction up to that limit. Who doesn’t like a nice boost in your college fund through saving on taxes? You can learn more on their FAQ’s.
I Want To Hear From You!
Tell me about how you’re saving for college – what tips did I miss? Did you learn something new about CHET benefits? Let me know in the comments! And thanks again to CHET 529 for partnering with me on this post, I had a blast writing about it and hope someone reading this wins a scholarship!
Looking for more resources on sending kids to college? Go to my one-stop resource page.
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Liz, it’s great to hear about the giveaway options by state. Plus, $250 free is a great deal. NH doesn’t have a 529 option so I use Vanguard’s Nevada one. It’s worked for us. Congrats to your son on winning–I love the bowtie!
The Vanguard one is a great option if your state doesn’t have a 529. And I thought the bow tie made him look extra snazzy! 😃
I opened my 529 a few months before our son was born and contributing to it monthly. We also plan to offer guests attending his birthday and graduation parties to contribute to the 529 rather than give a gift.
That $250 offer is a great deal for the Connecticut 529, I should have looked into that…maybe if we have a second baby. We have California’s 529, Scholarshare and it’s pretty good so far
Congratulations on the PLUTUS award! Proud of you!