Before saving for college, make sure your own financial foundation is secure. You can borrow for education, but you can't borrow for retirement. Once your retirement plan is on track, we can work together to build an education savings strategy that fits your goals, timeline, and family situation if you plan on helping your children (or grandchildren) with college.
For most families, a 529 plan is the right tool for tax-advantaged growth for qualified education expenses. Even though 529s are often offered through state-specific plans, your child can have a 529 in one state and use it to attend college in another state. If they do not go to college, the funds can be transferred to other eligible beneficiaries or withdrawn, with taxes and a 10% penalty. So, the money is never stuck in the 529. Lastly, I’m a fan of 529 plans for the option to overfund them, if it makes sense, so your child can convert up to $35,000 from their 529 to a Roth IRA in their early working years, when their income and tax bracket are likely low. I view this as an awesome opportunity to help kickstart their own retirement investing and to continue the same tax-free growth the 529 had been enjoying since they were small.
Nearly half of American adults don't hold a college degree. About 40% of high school graduates don't go to college at all. A good plan starts with an honest conversation about your child's interests, aptitudes, and goals. For students pursuing trades or technical programs, saving for vocational training is just as valuable, if not more so, than saving for a four-year degree. In my opinion, one of the worst things you can do to a child is force them to go to college for a degree they don't care about, while saddling them with student loans.
One of the most underrated ways to prepare a child for adulthood is a job. Work teaches responsibility, resilience, and self-awareness. It exposes them to both good and bad bosses. It can help them figure out what they want (and don't) to do for a job as adults. Encouraging work experience in high school is one of the best investments parents can make. It also helps your child take ownership of their spending from their income and is an excellent opportunity to begin teaching them financial responsibility. I’ve always heard it said that it’s better to let your children “fail small” with money rather than big later in life.
Lastly, research consistently shows that students who work 10–15 hours per week during college (no more than 20 hours, though) have higher GPAs and graduation rates on average.
One of the most important things parents can do is be clear with their children early on about expectations regarding who will pay for college. Will you help pay for college? If so, how much? Are student loans on the table? (I generally recommend avoiding or minimizing them.) Could your child start at a community college, often free or low-cost, before transferring to a four-year school? What about taking AP classes for college credit in high school? Could they live at home to reduce costs while staying on your health insurance?
These decisions are much easier when everyone knows the plan before senior year of high school.
Ultimately, neither a savings account nor a tuition payment determines your child's future. Work ethic and emotional intelligence matter far more than where they go to school or what degree they earn. Financial planning for education is most effective when it's paired with intentional parenting, helping your children develop the character and habits that will carry them through whatever path they choose. Believe me, between undergrad and two grad schools, I've spent 8 years in school, and there are some people with great degrees who struggle to be successful as adults because they lack a work ethic and integrity.