A SMART Strategy For College Savings

Have you made any New Year’s Resolutions for 2023? Whether you want to get physically fit, financially fit, and just start the new year with a fresh perspective, there’s an acronym that can help you keep your new goals for the year. It’s S.M.A.R.T. This simple strategy can help break your goals down smaller and more doable steps. Following this process can add up to big savings in your 529 plan.

S.M.A.R.T. stands for:

S – Specific

M – Measurable

A — Achievable

R — Relevant

T — Timely

Here’s how to work this approach for your college savings.

S is for Specific

Studies have shown that the more focused your objective is, the more you strive to reach it. So think of what you really want to accomplish with your 529 college savings account and how you want to do. Maybe your goal is to open a college savings account, to set up a new contribution amount, to increase the number of times you contribute in a year, or to stretch for a new savings goal. Then place a number on your goal; it could be a dollar amount to open a 529, a larger contribution, a new deposit schedule to match paydays, or a new percentage to cover future college costs.

Another specific step, which can build your Ohio 529 account, is to deposit your tax refund into it. By contributing the Ohio average tax refund of nearly $2,450 each year to your 529 plan, you could cover almost 40 percent at an Ohio four-year public university. Or you could elect to add a disappearing expense to your account. A disappearing expense is a temporary cost in your family’s budget. For instance, preschool is a huge disappearing expense. Once your child starts attending school full-time, why not contribute those former day care or preschool costs to their future higher education by depositing it into a 529 plan.

Make your goal as definitive as possible, and then write it down. Also, discuss this focused goal with your spouse to make sure you’re on the same page and to hold each other accountable.

M is for Measurable

This next small step is why you wanted to add a number to your goal — to measure how you’re doing on your resolution. Also, you have a starting point to map out how to reach this goal. For instance, if you wanted to contribute a certain dollar amount to your 529 plan this year, divide that amount by 12 for a monthly contribution or by 26 for bi-weekly contribution, based on your payday schedule. Then you can start tracking your contributions and see your progress to reach that goal. As you see that number start to climb, your sense of accomplishment will climb as well. If you need a visual for encouragement or if you want to get your children involved with saving for their higher education, create a thermometer progress chart and mark off the levels as you move closer to your goal. Being able to measure your progress on this goal can be a powerful push to complete it.

A is for Achievable

Make a realistic resolution. It’s great to have big dreams; however, if you discover that your goal is impossible based on your family’s current budget, it’s easy to get discouraged and not strive it. Therefore, you need to take into account your family’s other obligations when aiming for a new college saving goal. And it’s OK to start smaller than you wish; baby steps can add up to big savings in the end. Besides, once you’ve been able to accomplish a smaller goal, it makes the next larger one seem more feasible.

R is for Relevant

Ask yourself why you want to work on this resolution. It’s simple for most parents: You are investing in your child when you save for their future higher education. That makes any college savings resolution relevant. Every parent wants their child to have a better life than they did. A higher education makes that possible. You make their higher education possible by saving in a tax-advantaged 529 plan.

T is for Timely

Every goal or resolution should have a target-finishing date. This will help you to stay focused. When setting up a target date for your goal, make sure it’s realistic and accomplishable. Even if you’re stretching towards a goal for a few weeks, a few months, or a few years, a deadline makes your goal trackable so you can judge how you are doing. A set period also shows you all the successes you’ve had along the way.

So use the S.M.A.R.T. strategy with any of your New Year’s Resolutions to improve your chances of accomplishing them. You should be especially proud of your resolve to work on your higher education goals because someday your child is going to college.

For more than 33 years, Ohio’s 529 Plan, CollegeAdvantage, has been helping families across the nation save for their children’s education after high school. Ohio’s 529 Plan covers qualified costs at any four-year college or university, two-year community college, trade or vocational school, apprenticeship approved by the U.S. Labor Department, or certificate program nationwide that accepts federal financial aid. Start, add, or give a gift with as little as $25 at CollegeAdvantage.com.

*This article originally published in January 2019 and has been update with new information in 2023.

 

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529 Short Course: New Parents

5 things every new parent needs to know about saving for education

  1. Why Ohio 529?
    529s are specifically created for higher education savings. Unlike a traditional banking account, a 529 account benefits from tax-free earnings and tax-free withdrawals. For Ohio residents, there is also a state income tax deduction for those contributions.
  2. It’s simple to start.
    You can open your 529 account online in minutes with as little as $25. With ready-made portfolio options, you don’t have to be a financial expert to feel confident in your savings plan choices.
  3. Set it and forget it with automatic deposits.
    The sooner you start saving, the longer your account benefits from the Ohio 529 tax advantages as well as compound interest. Many new parents take their 529 contributions off their to-do list by setting up small automatic deposits from either their banking accounts or paycheck. Also, with our ReadySave 529 app, it’s also easy to track and adjust your account right on your mobile device.
  4. Save for college, career training, and more.
    Ohio 529 can be used at over 30,000 schools of all kinds, nationwide, including universities; community colleges; trade, technical, and vocational schools; certificate programs; and apprenticeships. Your Ohio 529 account can also pay for K-12 tuition at a public, private, or religious school. And, if it’s not needed for educational expenses, you can now roll over your 529 to a Roth IRA.
  5. Others can help.
    It’s easy for family and friends to contribute to your child’s account and receive tax benefits for themselves. You can share your account’s unique Ugift number with others to contribute online without creating their own 529 accounts. Those who live in Ohio will also receive a state income tax deduction for their contributions. Also, you can sign up to have reminder emails sent to you and loved ones for the big milestones in your child’s life.

Hoping to find gold at the end of the rainbow? If you are saving with Ohio 529 CollegeAdvantage, you have the benefit of Ugift with your account, which is savings gold.

Ugift makes it easy for others to give to your Ohio 529 account. With Ugift, you generate a unique code which allows loved ones to contribute to your Ohio 529 savings plan without needing the actual account number. Once they have the Ugift code, your friends and family can visit Ugift529.com to make their online gifts directly to your 529.

When friends and family ask for gift ideas, share that you are saving for your child’s future education with Ohio 529. Then invite them to join in with gift contributions to your Ohio 529 account with Ugift. After all, a gift for your child’s education will truly last a lifetime.

The quickest and easiest way to pass along your child’s Ugift code is with the ReadySave 529 app, which you can access as an Ohio 529 CollegeAdvantage account owner. At the bottom of every page is an Ugift icon. Click on the gift symbol to view your Ugift code which you can send immediately as an invitation via texts, emails, and Facebook/Instagram chats from your phone.

Or log into your account online to view your child’s Ugift code to send to family and friends who would like to give the gift of education.

The Ugift code doesn’t expire. Which means whenever there is an occasion to celebrate­ like baby showers, holidays, birthdays, graduations, and special achievements, your family and friends can give to your Ohio 529 account. And they can choose to contribute as much as they want whenever they want. It can be a one-time gift or recurring gift; all they need is that Ugift code. Your loved ones’ contributions - whether big or small – will add up over the years. Added to the power of compound interest, these gifts will power your 529 savings to cover even more college and career training costs.

An added bonus for gift givers who live in Ohio: They are also eligible to receive a state income tax deduction for their Ohio 529 gift contributions, up to $4,000 per year, per beneficiary.

To learn more about all of the gifting options with Ohio 529 and order cards for special occasions, visit  529 Gift Central.

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