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There’s one thing I’m particularly focused on for 2024. Keep reading to see what it is.
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When my kids were younger, I refused to look at college costs. The reason? I didn’t want to get needlessly stressed and depressed. My kids aren’t on the cusp of attending college; my oldest just started middle school and my twins are only in third grade.
But still, saving for college has always been on my radar — hence my decision to start doing so when my kids were infants. And now that my kids are a bit older, I really want to buckle down and put more money away for their education.
I had to take on debt in the course of getting my degree, and that wasn’t fun. I’d like to do what I can to help my kids avoid similar debt if possible.
At the same time, though, U.S. News & World Report says that the average cost of tuition and fees for the 2023–24 school year is a whopping $42,162 at private colleges. Even if my kids stick to public colleges, the average cost there is $23,630 for out-of-state schools and $10,662 for in-state schools. In other words, no option is cheap.
That’s why my main financial goal for 2024 is to boost my kids’ college savings. But I don’t plan to put more money into a 529 plan. Rather, I intend to put more money into a regular brokerage account instead.
A well-thought-out strategy
Although I thankfully already have some money set aside for my kids’ education, the reason I’m so intent on saving more in 2024 is that I want to give that money time to grow. I intend to invest those funds pretty aggressively — namely in stocks or broad market ETFs — in the hopes that whatever contributions I make in 2024 grow quite nicely in time for when those college tuition bills might start rolling in.
If I wait a few more years, I won’t have nearly as long a window to let that money grow. So I plan to adjust my spending accordingly in the new year to prioritize college savings.
Now, I already have some money for my kids’ education in a 529 plan. The nice thing about these plans is that investments get to enjoy tax-free growth. But with a 529 plan, there can be penalties for taking withdrawals for non-education purposes. And since my kids are so far away from their college years, I have no idea what their higher education goals or plans look like. Neither do they. As such, I don’t want the money I save next year to be restricted in any way. That’s why I intend to put it into a regular brokerage account.
This type of investment account doesn’t offer any tax breaks, so if I make money in that account, I’ll be liable for the tax bill year after year. But that way, the money is mine to spend as I choose.
If my kids opt to go to less-expensive colleges, I won’t have to stress about an overage. At that point, I’d have the option to use that money for other things, like helping them buy their first cars. Heck, I might even decide to take some of that money back for my retirement, since I’m the one saving it!
An important goal of mine
Because I know what it’s like to have to pay off a college degree, I’m hoping to spare my kids that stress. As such, I’m making college savings my top financial goal for the new year. However, I’m not setting a specific savings target. I feel like that would be putting too much pressure on myself. Instead, I hope to just do the best I can.
You may be worried about paying for college for your kids, too. (Join the club!) If so, I highly recommend socking money away well ahead of their high school years so you’re not scrambling to play catch-up when they’re older.
A lot of people I know with kids of similar ages to mine aren’t prioritizing college savings at all. That’s their choice. But it’s really important to me to be able to fund my kids’ education, so I’m willing to make sacrifices at this stage of the game for that to happen. If you feel similarly, then you may want to put college savings on your list of 2024 goals, too.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.
