Who said graphs are for engineers and nerds, or maybe they are. But as they say a picture is worth a thousand words. The picture above says that if you were born in the 1980s and did not save money in an instrument that grew at least 4%, you would not keep up with the inflation of everyday purchases.
If you did not grow your money at 7.5%, you would not be able to keep up with the increasing costs of college tuition. We all know what the savings bank interests rates are in the US and even the peanut interest money that we get gets taxed by federal and state taxes as well leaving behind nothing.College tuition is the monstrous one of them all.
Questions like: I am too young to think about my kids' college....Why should I think about their college tuition; they need to bust their ass and get scholarships and pay it all themselves. Good questions but first of all no scholarship can cover all the costs incurred. Secondly you might be the one going to college for an advanced degree in the future, and college cost is not just about the tuition but other expenses like living, books, registrations, conferences, etc.
To prevent paying taxes and growing money tax-free for future educational expenses, the 529 college savings plan is an amazing opportunity. These savings plans are offered in every state and may even have special discounts on state taxes some times. I personally have the NY college savings plan and once you open it you get to pick mutual funds managed by companies like Vanguard, Schwab, Fidelity. Pick low cost index funds once again and spread the money in the 529 across stocks, bonds.
One can get a 529 plan from any state and go to college in another state. The 529 plan is just a place to park and grow the money for qualified educational expenses without ever paying tax on a single dollar. You can make yourself as the beneficiary and use it for online courses/degrees/education etc. The beneficiary can also be changed at any time. Here is a great resource to figure out what monthly payments are needed to pay for college in different universities.
http://www.savingforcollege.com/college-savings-projector/
So start putting some money away into a 529 plan today and be better prepared for a costly tomorrow!
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