Watching Your Wallet: Planning your 529 savings

Watching Your Wallet: Planning your 529 savings
Published: May. 23, 2022 at 5:55 PM EDT
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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 your child pay for college, a 529 plan is a way to save. It’s a type of investment account that offers tax benefits when used to pay for qualified education expenses. Its value goes up and down based on your investments and the stock market. A lot of people put money into these plans each year, but it’s hard to know if your saving is on track.

Robert Farrington, the founder of the College Investor, said parents should be saving around $96 per month for a child or about $1,151 dollars a year.

“There are a lot of ways to get money into it. It doesn’t have to be your own savings,” Farrington said. “You can have gifts, you can have tax refunds, you have other ways to save.”

The College Investor recently created a list to give parents a goal for how much to get into an account as your child grows up. It lists a high end -- which is what’d you’d need for a private college -- and low end, which is about what you’d need for an instate public university.

“It’s also by age, because you want to allow for the growth of that money,” Farrington said. “And the longer you have, the longer it has to grow and the more it has to grow.”

For instance, having about $10,000 in an account by the time your child is 7 is a good goal for saving money for an in-state school.

Now the chart just shows benchmarks or goals to set, but in the end, Farrington stresses any little bit you save up toward college for a child is good. If that’s part of your family’s plan.

More: Watching Your Wallet

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