Tuesday, November 18, 2014

Bang for Your Bucks: AR529

I can barely remember to keep his lunch box packed, so who here thinks I have Nathan's college savings plan in order?

The obvious answer is no, and that would be the correct answer, as well. When it comes to thinking about saving for my kids' college, my initial reaction is fear because three kids means three gigantic sums of money. However, my second reaction is this: no big deal. My kids are young, I only have one in school, and college isn't on the radar. I'll figure it out when I get there, and hopefully they'll excel in academics or athletics and it won't even be an issue. This weekend I heard from a few speakers at an Arkansas Women Bloggers event that made me see my line of thought for what it is: wrong.

Nathan is seven years old. He will be a high school senior in a mere 10 years. As much as that sentence pains me to type, it is the truth. I need to be doing everything I can to help fund his first step into the real world, and Arkansas' 529 plan, known as The Gift Plan or simply AR529, may be the best way to to it.

As opposed to just chunking some money into a savings account that will maybe gain 50 bucks in the decade I'm waiting to use it, this plan will help me see that money grow. I have the option of what percentage of my investment goes into stocks versus bonds, and the minimum requirement is only $15 a month. Anyone can contribute to your child's account, too, and that donation is tax deductible. For instance, if grandma is feeling charitable and wants to give, she can claim whatever she gives on her own taxes up to $10,000.

Other points:

  • There's no limit to how this money is spent. It can be used at any federally recognized college around the globe, whether two- or four-year, vocational or graduate institutions.
  • If Nathan keeps his second-grade track record throughout high school and ends up with a full ride to school, the money in his account can be rolled over to either or both of his siblings.
  • If you feel so inclined, you can use UGift to send a simple code to friends and family who wish to give to your child's savings, making the process very easy.
  • This would be the perfect baby shower gift. You can't tell me those name-brand shoes your friend's baby girl will wear twice can compare to the start of her future.
  • The annual fee for owning this account is just $75 for every $10,000 saved.

    The ins and outs of this plan really piqued my interest as a better alternative for saving, however, the real life application shared by Gwen Moritz of Arkansas Business hit home. She used this plan to fund her sons' education and it was nice to hear that it's possible someone can actually make this work. The most assuring thing she said is that it's never too early to start, but it's never too late, either.

    College tuition is so much higher than when I was in school, and I can't imagine that trend will reverse any time soon. It's harder and harder for kids to "put themselves through college." I absolutely understand that many can and will, but if there is anything I can do today to lessen that burden, I'm going to do it. Any money they don't have to worry about when it comes to their education will help. That's why I want the money I save to give me the biggest return possible.

    Now the idea of having a pot of money ready when the time comes is all well and good, but it's the first step that's most important. Making the account and setting up a deposit plan that's right for you is the hard part, saving is easy.

    There's no good reason for me not to start. What's stopping you?

    While it's fresh on your mind, go check out the AR529 Web site and let it explain better than I can. If you are already saving, high fives all around, but if it's something you want your future self to worry about, why don't you do her a favor? You know you'll be glad you did. Happy Tuesday, y'all!

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    Grace Grits and Gardening said...

    As someone who started 529 plans for both my children way back in, I don't know, 1994-ish, I can say it was one of THE smartest things we ever did. At the time, it was difficult to imagine college. It was difficult getting through each day with an infant and a pre-schooler. Today my daughter is in her 2nd year of law school and my son is a senior at U of A. Our 529 plans took the financial burden out of college. Highly recommend this!

    Aduke Schulist said...

    Being there really got me thinking about college savings for my children too.

    Jessica Bauer said...

    Thank you so much for sharing, Talya! Knowing people in real life who can make this work makes me even more excited about getting started. I'm so glad I was able to attend and learn all about it.