LANSING, Mich. (WILX) — A 529 account is designed to help save money for your child’s education.
If one of your goals as a parent is to help pay for your child’s education, a 529 plan is one way to save. It is a type of investment account that offers tax advantages when used to pay eligible educational expenses. Its value goes up and down depending on your investments and the stock market. Many people put money into these plans every year, but it’s hard to know if your savings are on track.
Robert Farrington, the founder of College Investor, said parents should save about $96 a month for a child, or about $1,151 a year.
“There are lots of ways to get money. It doesn’t have to be your own savings,” Farrington said. “You can have freebies, you can have tax refunds, you have other ways to save.”
The College Investor recently created a list to give parents a goal of how much to put into an account as your child grows. It lists a high end – what you would need for a private college – and a low end, which is roughly what you would need for a public university.
“It’s also by age, because you want to allow that money to grow,” Farrington said. “And the more time you have, the more it has to grow and the more it has to grow.”
For example, having about $10,000 in an account by the time your child turns 7 is a good goal for saving money for public school.
Now the chart only shows benchmarks or goals to set, but in the end, Farrington points out that whatever you save for college for a kid is good. If it’s part of your family’s plan.
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