529 College Savings Plan with Match

If you’re an avid follower of my personal finance blog for Millennials, then you know that I wrote almost exactly one year ago about how I opened a 529 college savings plan for my daughter when she was only 6-days old. A bit extreme for some, but for me it was right on schedule.

I had actually read about some Millennials opening 529 plans for children they didn’t even have (or “expect” to have even in the next 9-months). That scenario was a bit too aggressive for me, as we had been trying for some time to have a baby with no such luck. I was convinced opening a 529 college savings plan for a pre-conceived child wasn’t right. With all that said, I am glad I opened a state-sponsored 529 plan for my daughter when she was only 6-days old.




529 Savings with a Match?

Now, let’s get back to the title of my article on a 529 college savings plan with a match. Does such a 529 plan exist you ask? Well, no, not exactly. The premise of this blog post is to encourage Millennial parents to not only contribute whatever they can on a regular (monthly via dollar cost average) basis to their child’s 529 savings plan, but to also match any gifted contributions you receive from family members and friends.

For example, this week my parents gave my baby girl a Valentine’s Day outfit and a $20 bill. My parents have done this, albeit in very small amounts thus far, but they have gifted us some money for our daughter’s college fund.

This was at our request…otherwise I think they would just give us more and more gifts and presents. But I would strongly prefer money for her college fund. I struggled with student debt because my parents didn’t save. I don’t want to struggle to put my daughter through college, nor did I want her to take on the burden of huge student loans like so many of us Millennials are these days.

The day after my parents gave my daughter $20 for Valentine’s Day I immediately wired that amount from my checking account to her 529 savings plan. I then matched 100% of the contribution, so I actually wired $40 to my daughter’s 529 plan. We received a couple contributions from family members at her birth but I didn’t match those. To be honest, I just thought of the idea in the last couple of months. Now I am ready to act on the idea of a 529 savings plan with a match (by me!).

So moving forward I am going to try and match 100% of any family members’ 529 contributions that my daughter receives. Granted these are small amounts, but if a family member gives my daughter $100 for her college savings plan, I am going to show my appreciation to both by matching 100% of that. My daughter should begin college in 2035, and from my calculations it is going to be very expensive.




Cost of College Calculator

Previously I wrote about my newborn daughters projected college costs in the year 2035. If any of my fellow Millennial parents out there have done this, I assume there was sticker shock for you as well. The future college costs numbers are truly staggering. Now that I know what my daughter’s costs ranges are 18 years from now, I now have to figure out how exactly I go about hitting those numbers.

529 College Savings

Luckily I opened a 529 savings plan for my daughter when she was 6-days old, and I now have 18 years of compounding interest on my side. So let’s start crunching some numbers to see what exactly I need to contribute each month to my daughters 529 college savings plan.

In-State School #1

$170,000 (Tuition and Fees Only)

The first in-state public university I would like to send my daughter to costs $170,000 for four years’ worth of tuition and fees (no room and board).

$420 per month contribution x 18 years @ 7% annual return = $170,000

$310,000 (All Expenses – Tuition, Fees, Room and Board)

If I want to pay for all college expenses for my daughter at my first choice of colleges, that price tag would be $310,000. And that costs would include tuition, fees, room and board.

$760 per month contribution x 18 years @ 7% annual return = $310,000

In-State School #2

$92,000 (Tuition and Fees Only)

The second in-state public university I would like to send my daughter to costs $92,000 for four years’ worth of tuition and fees (no room and board).

$225 per month contribution x 18 years @ 7% annual return = $92,000

$111,000 (All Expenses – Tuition, Fees, Room and Board)

If I want to pay for all college expenses for my daughter at my second (much cheaper) choice of colleges, that price tag would be $111,000. And that costs would include tuition, fees, room and board.

$275 per month contribution x 18 years @ 7% annual return = $111,000




I Opened a 529 for My Baby at 6 Days Old!

I don’t use this Millennial personal finance blog to brag about anything I do financially, whether it be via investing or my professional career and my salary. However, I do want to take a minute to pat myself (and my wife) on the back because we just opened a 529 college savings account for our newly born daughter, who is less than one week old. To be exact, she wasn’t even six days old actually!

529 college savings plan

I know there may be some naysayers out there, considering you can technically open a 529 college savings plan prior to your child’s physical birth. You can open an account long before you even have a child or the minute you find out you’re expecting. I was fully aware of this option but I just couldn’t bring myself to opening an account for a baby we hadn’t had yet. I know the risks are ultra-low of complications with the baby, but I just felt like it was a possible jinx if I opened a 529 before my baby was born. But I was determined to open a 529 nearly immediately after she blessed us with her presence.

Oddly enough, I actually opened my account for my 6-day old the same way you would if you opened a 529 college savings plan for a child 6 months before birth. I didn’t yet have a social security number for my daughter, which along with a name and birthday is all you need to open a 529 college savings plan. So instead I opened the 529 and assigned myself as the “student”, aka the beneficiary of the plan. Once I have a social security number for her I can then transfer the account over into her name. Any transfer within your family is free of charge. It is no different than the transfer policy from one child to another due to one child receiving a scholarship and deciding not to attend college.

The process for opening my daughters 529 college savings plan could not have been easier. I was able to quickly setup the account and connect it to my bank account via a routing and account number. I easily setup an automatic monthly transfer that begins this April. And then I setup an auto increase on her birthday each year. So beginning in March 2018 I will contribute $25 more each month, and then again in 2019, 2020, etc. I was then able to make a one-time contribution to kick start my daughters 529 college savings plan.




Automate Your 529 Savings Plan

I love automating my savings goals and this 529 plan allowed me to do this effortlessly. I will now be contributing to my daughters 529 at least monthly and that amount will go up each year to ensure I save as much as possible. We hope to receive some “college money” as gifts for her birthdays over the years from grandparents and other family members as well. We can then easily log in and make a contribution to her account when that happens. Its great.

Future Cost of College Calculator

And I am going to need all the help I can get to afford college in 18 years (year 2035). I played with a future cost of college calculator and the projected costs are unreal. Seriously, unreal what the anticipated costs of college would be in 18 years. For an in-state public university in my state, college tuition is expected to range from $92,000-$170,000, depending on the university, in the year 2035. Again, these ranges are only for in-state public school, nothing private, and these costs are only for tuition and fees, no room and board. If I want to pay for all college expenses (tuition, fees, room and board), that will run me anywhere from $111,000-$310,000 for four years of college. Wish me luck…at least I opened her account when she was 6-days old so I now have compound interest on my side.