Saturday, February 20, 2010

College savings and 529s

One of those things that everybody knows they should do but may still not do is backup their computer files. Another one is parents saving for the children's education. I recently just started funds for my kids, after delaying for a few years and not knowing how to start. Here are some useful resources I used during the process:
  • The college savings plan became much more concrete after listening to episode 25 of Jumping Monkeys. I listened to that podcast on the TWiT network before it went off the air. It may have been my favorite podcast, possibly behind TWiT itself. Episode 25 talked about saving for college, 529s, and had a guest from Freshman Fund. Which brings me to. . .
  • Freshman Fund is a website designed to help people save for college. In particular, it makes it easy for friends and relatives to donate to your child's fund. It also suggests plans for you based on the state where you live. For example, I live in Massachusetts, which has no tax advantage for using their fund so it makes since to pick a fund from any other state if that state's is better. I ended up NOT using this site, though, because I did not like having my kid's birthdays so publicly and easily available.
  • I started looking at 529s after hearing about them on Jumping Monkeys. They described them as "the hot new thing," but I think they aren't actually that new. 529s appealed to me because they were easy to set up, use, and maintain. It took me half an hour to set up accounts for my kids and start saving.
  • The question then becomes: "How do I pick which 529 to use?" In addition to looking on Freshman Fund, I found a number of good resources:
The important thing is to start now. Starting seemed very overwhelming to me because I thought I would make the wrong choice and lose money to fees and such. However, picking a good 529 just takes a little research and then they are super easy to set up.