“An investment in knowledge pays the best interest.” – Benjamin Franklin
Do you want your children to attend college without stressing over tuition? Most parents want their children to go to college or complete some form of higher learning. People believe the expensive price tag to attend a secondary school is necessary for a better future. According to The Balance, the average starting salary for a college graduate is around $50,000. If you want to save for your children’s education, a 529 plan may be right for you.
529 Plan
529 Plans are accounts that can be used to cover educational expenses from kindergarten through graduate school. SEC.gov defines a 529 plan as a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plan rules and regulations vary from state to state.
The money in a 529 plan grows tax-deferred. However, if the money is used for education expenses, the withdrawals will not be taxed on a federal or state level. If 529 plan withdrawals are not used for education expenses, they will be subject to state and federal income taxes and an additional 10% federal tax penalty on earnings (Sec.gov).
Conclusion
Saving for college is not an easy task. However, there are tools that can help you chip away at saving for higher education. The more you can save for school, the less debt you may have.
Action
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