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Believe it or Not, Your Kids are Paying Attention & Your Savings Efforts Make a Big Difference

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3 little piggy banksSince I was a young boy I was told by my parents that college would be a part of my future. It was an opportunity my parents never had and they knew how important a college education was to my future success as a person and as a professional. At an early age, my parents began saving for my higher education and they told me about the funds that were set aside to help with tuition, books and other costs. In high school I got a part time job and the dollars I earned were also set aside to help pay for school.

Looking back as an adult and now as a professional in the college savings field, I can see the accuracy of a recent study from the Center of Social Development at Washington University in St. Louis. The study concluded that children with a college savings account are six times more likely to attend a four-year college, compared to children with no dedicated account. I guess it goes back to that old adage, “actions speak louder than words.” As a kid I can vividly remember never once questioning whether or not college was going to be a part of my future, because I knew that resources had been set aside for my education.

In 1998, I was the first person in my family to graduate from college and looking into my parents eyes on commencement day, I knew that diploma I was holding was just as much theirs as it was mine. It was not an easy accomplishment; I worked throughout school, earned a few scholarships along the way and most importantly had the great fortune of having the financial and emotional support of my parents. It was because of this powerful experience that one of the first things my wife and I did when both my daughter and son were born was to open a 529 Prepaid Tuition Plan through Washington’s Guaranteed Education Tuition (GET) program. Little did I know at the time I opened the accounts that six years later I would begin working for the GET program.

What my wife and I loved about the prepaid tuition plan, was the guarantee that no matter how much tuition increased over the next 18 years of our children’s lives, we knew that our savings would increase at the same rate as tuition in our state. This was very reassuring after reading headlines in our local paper about year-after-year double digit tuition hikes at our state’s public universities.

IMG_0349GET’s prepaid tuition plan also provides a host of other benefits that made this savings option attractive to us. First, funds can be used nationwide at universities, community colleges and technical schools. Second, dollars in prepaid plans grow tax free and withdrawals are tax free for qualified education expenses like tuition, room and board, books and lab fees. With our GET accounts we were also able to set up custom monthly payment plans that make saving affordable and attainable. Even better, we have encouraged family and friends to contribute to our children’s accounts for holidays and birthdays.

Since there are so many different ways to save for your children’s education, it can become overwhelming trying to absorb all the information related to the various plans that are out in the marketplace. A good resource for wading through all the details is the College Savings Plan Network (CSPN) and their website collegesavings.org.

The most important thing to remember is that some savings is better than no savings, and the sooner you can start saving the better off you will be in the long-run because your money has more time to grow. Last and most importantly, even though it may not seem like it at times, your children are listening and looking up to you. It’s critical that you know your actions in saving for their future education will be instrumental in shaping their future.

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