Want to Save Money for College? Think About a 529 Plan.

save money for college with a 529 plan

Okay, so you want to save something for your child’s college education. Where should you put the money?

Well, according to research by Sallie Mae, here’s how parents in 2014 are making that decision:

  • 45% are using a savings account
  • 29% are using a 529 plan
  • 27% are using a checking account
  • 20% are using a general investment account
  • 18% are using a retirement account
  • Various other percentages for various other types of accounts

What immediately jumps out to me is the small percentage of people who are using an account specifically designed to save for college. Only 29% of people who are saving for college are using a 529 plan. And 18% are using their retirement accounts! Eek!

If you really want to save money for college, it makes sense to put at least some of it into an account that gives you special incentives to do so.

And in my opinion, there’s usually no better way to do that than with a 529 plan. Here’s why.

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5 Simple Ways to Start Saving for College

start saving for college

When people start having kids, one of the first money questions they often have is how to start saving for college.

It feels a little overwhelming, given all of the other things we have to budget for and all the talk about rising college costs. But it also feels important. After all, shouldn’t we be giving our kids every opportunity we can to chase their dreams? And isn’t having money available for college a big part of that?

Now, before going any further, I would really encourage you to read my post explaining why saving for college isn’t one of the top financial priorities for my wife and I. Unless you have unlimited income, you’re going to have to make some tough decisions when prioritizing how your money gets used, and there are some good arguments for putting college savings closer to the bottom of that list than the top.

You’re not a bad parent if you put other financial priorities before college. It might even make you a really good one.

But with that said, the question of saving for college comes up a lot, so today I’d like to give you a few simple ways to think about getting started.

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Automating Your Way to Wealth

automated savings - automating your way to wealth

I’ve learned a lot of really interesting money tips and tricks over the years.

I’ve learned that some of the best investment strategies are the simplest.

I’ve learned how to budget without actually sticking to a budget.

I finally figured out the right way to go about buying life insurance.

All those things have helped me, but there’s one tactic I learned years ago that stands out head and shoulders above the rest. It’s the one thing that more than anything else helped me increase my net worth over 8x since I started using it.

And the best news of all? It’s just about the easiest thing in the world to do.

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How to Make Irregular Expenses Regular

how to make irregular expenses regular

A little while back, I shared my system for budgeting without actually sticking to a budget. It’s my way of staying on track with my savings goals without stressing out about how every single purchase fits into my plan.

A big part of that system is making sure that I can handle the irregular but expected expenses that pop up from time to time. Whether it’s a flat tire or a last-minute trip I’d like to make, I don’t want to have to worry about fitting those kinds of things into a “budget”, and I don’t want to stress about whether the money’s there when I need it.

I also don’t want to have to tap into my emergency fund, which is only there for real emergencies (like losing a job), not things I should be anticipating as part of everyday life.

So how do I handle those irregular expenses with minimal effort and minimal stress? By making them a regular part of my monthly plan.

Here’s how you can do it too.

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A Real Life Product of Two Parents’ Tough Financial Love

tough financial love

This post is from my friend Erin of BrokeMillennial.com. I asked her to share her story because it’s a great example of how giving your kids a little taste of the “real world” can help them grow into responsible adults. Take it away Erin! (P.S. I’m writing over at Erin’s site today too, so when you’re done reading this you can go check it out.)

At the tender age of seven I experienced my first financial smack down, dealt by the hand of my very own father. Unbeknownst to me at the time, this was simply one of many lessons my parents had in store for me that ultimately lead to my development as a financially literate millennial adult.

Money held a certain fascination for me, even before I truly understood the power of the almighty buck. I hatched a plot to capitalize on my childhood adorableness and little sister’s big, baby blues in order to get my hands on some dough.

On a hot North Carolina summer morning, I roused myself from my bed early on a Saturday to use my Mother’s yard sale to make a few of my own dollars. Using my little sister as free labor, we set up a Little Tikes picnic table stacked with Krispy Kreme doughnuts at the end of our driveway. As yard sale enthusiasts entered I politely asked if they’d like to buy a doughnut for fifty cents — a pretty decent mark up after my Dad bought a dozen for $4.

We hustled those grownups until our doughnuts sold out a little over an hour later. I proudly sat stacking my quarters and counting my earnings when my Dad appeared over my shoulder.

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