As director of college planning for the Massachusetts Educational Financing Authority, Julie Shields-Rutyna’s job is to help families plan, save and pay for college. But with two kids — one in high school and the other in college — she also has her own family to worry about.
“The truth is, it’s a struggle for me, just like it is for everybody else, to fit college savings in,” she says. “You really can’t save too much. I still have that resolution to continue saving and to step it up a little bit.”
It’s easy to say “I’ll do it next year” when it comes to saving for college, especially because it may not seem as pressing as other financial obligations.
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But consider resolving to give some attention to college savings this year. College costs continue to rise at a pace that exceeds inflation, according to the College Board, and average student loan debt at graduation is growing steadily. Seven in 10 seniors who graduated in 2015 had student loan debt that exceeded $30,000 per borrower, according to the Project on Student Loan Debt.
Whether you’re just starting out or have a child nearing college, here are five college savings resolutions for 2017 .
Resolution 1. Start saving: If you’ve been putting off saving for college, start by opening a college savings account or designating an account you already have for that purpose.
“However you save is great, as long as you put it into an account that you designate as college savings account, so when the roof starts leaking you don’t go to that fund,” says Shields-Rutyna.
Kevin Miller, a certified financial planner professional at Wyomissing, Pennsylvania-based Berkshire Investment Group, LPL Financial, recommends using a 529 plan, a state-sponsored college savings plan that allows money to grow on a tax-deferred basis and to be taken out tax free if used for qualified education expenses. There are typically no or low minimums — ranging from $15 to $250 — to open an account.
“It’s not an arm and a leg to get started,” says Miller.
Although nearly every state has a plan, experts say it often makes sense to look at your own state’s plan first, particularly if you could get a tax credit or deduction for using an in-state plan. But if you’re not sure where to start, check out college savings plan comparison websites, such as savingforcollege.com.
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Resolution 2. Set up automatic withdrawals: Even if it’s a small amount, $25 or $50 a month, set up monthly contributions to come straight out of your bank account and into a college savings account. Some employers even offer automatic payroll deductions into 529 plans.
Shields-Rutyna says data about college savings in Massachusetts shows that people who are enrolled in automatic withdrawals save more. As it becomes habit, most people soon find they don’t miss it, she says.
“You start early; you set it up; and you just get used to it,” says Miller. “And it really can add up with paycheck to paycheck contributions.”
Resolution 3. Increase contributions: If you already contribute monthly to your college savings plan, see if you can increase the amount you regularly put in. Shields-Rutyna says she tries to bump up her monthly savings contributions each spring.
Sometimes seeing the growth of regular contributions motivates people to want to contribute more, Miller says, adding that “it’s almost like a challenge.”
“Once you get started and start contributing on a systematic basis and see the benefits, I think that’s where people can really get excited and see the importance of saving for the long term and for college,” Miller says.
Resolution 4. Put cash gifts into college savings: Whether it’s money for a birthday or Christmas, Miller says he recommends parents put monetary gifts from friends and family into a college savings account.
You could even consider asking for college contributions rather than a physical gift.
“I think maybe that’s a hard conversation for some people to have with family members or friends,” Shields-Rutyna says. “The truth is, people love to know what would be a good gift to give on an occasion. Most grandparents, aunts or uncles would probably be thrilled knowing.”
[Discover four ways to kick off the college savings talk.]
Resolution 5. Get your child involved: Include your kids in the saving s conversation. Miller says when he was growing up, his parents would match, dollar-for-dollar, what he put in the bank. That same approach could be applied to college savings.
Another strategy, Shields-Rutyna says, is to decide with your children to put a percentage of money they earn baby -sitting or mowing lawns into a college savings fund.
“The whole family needs to relax and say, ‘ OK, we’re going to do the best we can, and let’s all do it together.'”
Trying to save for college? Get tips and more in the U.S. News College Savings 101 center.
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5 College Savings Resolutions for 2017 originally appeared on usnews.com
