Saving for College: My Story

This is a pic of me at my daughter’s first college campus visit yesterday. So in the spirit of that visit, I’m posting about one of my favorite financial topics right now, 529 college savings accounts! Here’s my story…

21 years ago, we began saving for our kids’ college educations. Note that we did NOT wait until our cars were paid off, or had maxed out our retirement contributions, or were mortgage-free. We wanted the power of time, compound interest, and TAX FREE EARNINGS for this investment. We knew we’d need to access the account in 18 years, and time was of the essence, so we started the year our son was born (2002). We did the same (in 2005) for our daughter.

Of the total account balance for our kids, the earnings alone grew enough to cover one full year of in-state tuition + room & board for each for them (approximately $23k per child).

So what was our approach besides starting early? P.S. It is NEVER too late to save!
In the first few years, we were inconsistent in our contributions. Our expenses were high with daycare costs, car payments and a mortgage, but whenever we had some additional money - a cash gift, a small bonus from work, or a tax refund went into the accounts.
In the years following, when our kids were both in elementary school, bonuses were higher, daycare was behind us, therefore contribution amounts were larger and were deposited regularly. Then 11 years ago, we paid off our house. We took that monthly mortgage payment amount and auto transferred it to the 529 accounts instead. Our 529 balances grew significantly.

In 2021, the year our son graduated from high school, his 529 balance was approximately $115k and we could fully cover the cost of 4 years of college for our son (public, in-state). Three of those years using contributions. One year using earnings from the 529 account’s investments.

Our investment “worked” for our son to give him an extra year of college! The same is happening for our daughter. The balance in her account is now over $140k. 12 months until she arrives on a college campus!