Starting a 529 College Savings Account

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Mr. O and I had always planned on starting a 529 account for Miss O when she was born, and we did…

Then it sat there collecting dust instead of dollars.  We’d deposit the checks our family gave us and that’s about it.  At 3 years old we had less than $1,000 saved, and that included the $500 we’d used to open the account.  For a while we ignored it because we were adjusting, but when Miss O turned 3 we had to face it.  We were underfunding her college account and we couldn’t ignore it any more.

Do you want to start a college savings account for their kids, but aren't sure where to start? Check out these handy tips.

But where could we get the money from?  We were financially stable, but we didn’t have “extra” money.  The “extra” always seemed to disappear when things like the life insurance bill came due, we needed new tires, or the dog decided to eat rocks.

Still, it needed to be done and I finally saw an opportunity.

Miss O was moving from the baby room to the “big kid” room at daycare.  In CT kids over the age of 3 don’t require the same level of supervision as those under 3 so the cost of care drops significantly.  We decided that we would take the money saved on daycare, the cost difference between the baby and big kid rooms, and divert it automatically to her 529 account.  We were already used to spending this money so it wouldn’t be missed and setting up automatic deductions meant we couldn’t spend it on dinner out or a new sweater.

We’re still not where we want to be, but it’s a start.  Once she’s out of daycare we’ll up the contribution and hopefully we’ll meet our goal by the time she’s 18.

Make it automatic.  When money comes out of your paycheck or account automatically, you will save more.

Pre-tax vs. after tax.  You can take out your 529 from your paycheck and not pay any tax on them.  The down side is that you will pay tax on it when you take the money out.

What kind of account.  A 529 account is one option, but you must use the funds on education expenses.  Other savings accounts, like mutual funds, or a CD are other options if you want more flexibility.

Make it a priority.  Saving isn’t fun.  You have to make a decision to make your savings a priority.

Do you want to start a college savings account for their kids, but aren't sure where to start? Check out these handy tips.


  1. Heather February 19, 2015
  2. Bridget May 10, 2017

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