It’s easy to overlook the significant impact that our education savings can have on our children at various stages of their lives.
With college in the not-so-distant future, it’s a perfect time to stop and reflect on the positive effects your 529 investments have had — and will continue to have — for years to come.
Here are four points in time to consider.
1. The early years
When children learn that someone is saving for their future, a world of possibilities opens in their minds about the direction their life may take. In fact, research has shown that children are more likely to pursue and complete higher education when they are aware that they have funds earmarked for this purpose.
Whenever and however you let your child(ren) know you were saving for their education after high school, you gave them a glimpse into their bright future, a reason to start dreaming big, and the opportunity to begin envisioning various forms of education and the careers they could lead to. You also began to demonstrate to them the importance of setting and prioritizing goals and taking consistent steps toward them. And depending on how much you shared about your efforts to save, you likely planted seeds about the value of budgeting and financial planning.
2. The college search
At the start of their college search and throughout it, your 529 account likely provided your child with confidence in knowing that dedicated funds had been saved for the journey on which they were about to embark.
You may have also provided your child with a specific understanding of available resources and the types of schools that would likely be within financial reach depending on net cost. By sharing this information, you helped manage expectations and reduce the possibility of misunderstandings about what would and wouldn’t be affordable.
3. The college years
Now, as they begin their post-secondary education and pursue it over the next few years, your decision to save in advance for this very point in time will continue to have a positive impact. Your savings will help your child to be free of financial distractions and instead, provide them with the opportunity to focus on their studies, personal growth, and overall well-being. Beyond this, your child will be able to explore majors that are a good fit versus only ones that simply provide a quicker route to student loan repayment. Your financial preparedness may also provide them with the ability to volunteer, explore unpaid internships in areas of interest, or study abroad versus having to be concerned with earning a certain amount during the school year or school breaks.
4. Upon graduation
Upon graduation, your commitment to saving for your child’s education and thereby reducing or avoiding excessive student loan debt will empower them to make career choices based on their interests, talents, and values, rather than being driven solely by financial considerations. In the absence of unmanageable student loan debt, you will have enabled them to begin their adult lives with a sense of freedom and optimism. Beyond this, you will also have given them the opportunity to begin saving for retirement, a first home purchase, continuing education, and/or other aspects of the life they’ve dreamed of.
Your 529 investment will continue to impact your child in ways you may not yet realize and your child’s appreciation for your efforts will surely be expressed in the days and years ahead as they reflect on the significance of your efforts.
On a personal note, I was touched by what my son Benjamin wrote in the foreword to my book, Route 529: A Parent’s Guide to Saving for College and Career Training with 529 Plans:
“As a recent college graduate, I appreciate the steps my parents took to save for my education, the opportunities I was able to pursue as a result, and the valuable lessons I learned by watching them plan ahead, a little at a time, for my future… I owe many thanks to my mom and dad for the steps they took to get me where I am today.”