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Four easy ways shoppers can become college savers
With things like retirement and rainy day funds to worry about, starting a college fund often gets pushed to the bottom of many families’ to-do lists. Today’s extreme college costs may frighten you, but if you don’t start saving now think of how scary your child’s future tuition bills will be. Maybe you’re just not a great saver. Your retirement savings are taken directly from your paycheck, but after that you spend every last dollar of your disposable income. You like to buy things, and would keep buying more if you had more money. How can you be expected to reserve some of your earnings for a 529 college savings account? Have you seen those new Pebble Smartwatches? There will always be financial aid and student loans to pay for college later, right? If this sounds like you, read on!
While saving for college often ends up on the lower end of the personal finance hierarchy, it shouldn’t be ignored. The costs of higher education are rising at alarming rates at a time when interest rates for borrowers aren’t getting any lower. In other words, loans are also getting more expensive. If you consider yourself a spender and have a hard time putting money away for future expenses, take a closer look at 529 college savings plans. Many 529 plans offer automatic investment options with monthly contribution requirements as little as $25.
One of the best things about 529 college savings plans is that they can really make your money work for you. Earnings in the account grow federally tax free, and withdrawals made toward college tuition and other qualified expenses will also avoid being taxed. Many states will also offer tax incentives for residents, including tax deductions on contributions.
If you like to shop, there are also credit cards available that will pay you back in the form of 529 account deposits. So if you’re at the mall and simply can’t resist the return of the Birkenstock sandal, go ahead and shop away – in some cases, you can earn up to 5% on purchases. For a pair of $100 Birks that means $5 goes into your 529 account and immediately starts racking up those tax free earnings.
Here are four cards that offer rewards that make saving for college easy and fun: