Austin Graham’s two daughters are both under two years old – but he and his wife have already started saving for their future.
In working with INB clients, Austin has learned firsthand how important it is to put away money for his children’s future expenses, especially college.
“You don’t know what the future holds, but you can plan for it,” Austin says.
When it comes to educational savings, a 529 plan with INB might be a great answer for your family.
A 529 plan is a tax-advantaged savings plan designed for future education costs. Also known as “qualified tuition plans,” 529 plans are sponsored by all 50 U.S. states. The name comes from Section 529 of the Internal Revenue Code, which authorizes the plans.
“It’s an investment strategy,” Austin says. “When you want to start saving for your child, you can put away money every month and invest in mutual funds. Your investment will follow the market, and you can choose to be more conservative or aggressive.”
When you’re ready to spend that money on your child’s educational expenses, you can then withdraw the money – and as long as you spend it on education, it’s tax-free.
So what qualifies as “educational expenses”?
Probably more than you think.
“A lot of people tend to think of just college, but several years ago, 529 savings were opened up to education for kindergarten through age 18 too,” Austin explains. “So, if your child needs a laptop for school, you can access your funds.” You can also use your savings for trade schools or vocational programs.
When it comes to savings, Austin is a big proponent of time over amount. Over time, your savings can compound, which means whatever you earn is continually reinvested and can earn money too.
“Einstein said compounding is the 8th Wonder of the World,” Austin laughs. “Time is our best friend when comes to investments. We advise starting as soon as you’re able to, to allow your money to compound.”
So how do you get started?
Come see us at INB Wealth, and we’ll make the process easy for you. Our financial advisors can sit down and go over your financial goals to see what investment strategy is the best solution for you.
When it comes to 529 plans, many people choose to set up payments on a recurring monthly basis, like putting $100 every month on the 10th into their child’s 529 plan.
Another perk: instead of birthday or holiday gifts, family members can also give to your child’s future education by contributing to your 529 plan.
Austin says a common question he gets is, “How much should I save?” While it differs for every child, Austin says don’t let the amount deter you from starting now.
“There’s no magic number, but anything you can put away is beneficial. Although there are a lot of variants in what needs to be saved, my answer is just to have something put away,” he says. “Even with $10 or $15 each month from birth, your kids can ride the market, and it could be substantial when it comes time for them to utilize it.”
Contact INB Wealth today at 217-679-1676.