7. Contribute to a 529 Plan for Your Children

A 529 plan is a tax-advantaged savings plan designed to help families save for future education costs, such as college or K-12 tuition.

Why a 529 Plan is a Powerful Financial Decision

• Tax-Free Growth: Earnings grow tax-free, and withdrawals are tax-free when used for qualified education expenses.
• State Tax Benefits: Many states offer tax deductions or credits for contributions.
• Flexibility: Funds can be used for tuition, room and board, books, and other education-related expenses.
• High Contribution Limits: Most plans have high contribution limits, allowing you to save significantly over time.

Example

Assume:

• You contribute $500 monthly to a 529 plan for 18 years.
• Your investments grow at an average annual return of 7%.

After 18 years, your account balance would be approximately $215,000, all of which can be used tax-free for education expenses.