Saving for Education: How to Start Planning for Future College Costs
Planning ahead isn’t only for retirement. For many families, one of the biggest future expenses to prepare for is education.
With the cost of college continuing to rise, starting early can make a meaningful difference. The good news is that families today have several flexible and tax-advantaged tools available to help prepare for future tuition and education-related costs.
Tina Mistry, CEO and Senior Financial Advisor at Portfolio Advisors Inc., recently discussed this topic on ABC30’s Watching Your Wallet, sharing practical insights for parents and grandparents who want to plan ahead with intention.
Here are key considerations when thinking about education savings.
Starting Early Works in Your Favor
Much like retirement planning, time is one of your greatest advantages when saving for education.
Beginning when a child or grandchild is young allows savings to potentially grow over many years. Even modest, consistent contributions can build momentum and help offset future costs.
As Tina notes, starting early helps “put the odds in your favor” when it comes to funding future education expenses.
Understanding 529 College Savings Plans
A 529 plan is one of the most well-known education savings vehicles, and for good reason.
In California, contributions to a 529 plan are not state tax-deductible. However, earnings can grow tax-free as long as funds are used for qualified education expenses such as tuition, books, and certain fees.
For families focused specifically on education funding, a 529 can be a powerful long-term tool.
Flexible Options Like Custodial Accounts
Not every family wants to lock savings strictly into education use. Custodial accounts can offer more flexibility.
These accounts allow funds to be used for a variety of future needs — not just college. That could include helping with a first car, housing, or other life milestones.
According to Tina, families can begin saving as early as the birth of a child or grandchild, giving investments more time to grow.
Don’t Overlook Scholarships
Scholarships can meaningfully reduce education costs, yet many go unclaimed each year.
“There are a lot of scholarships that go unclaimed,” Tina shared, noting that many are tied to niche interests or qualifications. Taking time to research and apply can uncover valuable opportunities.
Even smaller awards can add up and make a difference.
Passing Education Funds to Future Generations
One helpful feature of 529 plans is their flexibility within families.
If a student receives a full scholarship or doesn’t use all the funds, the account can often be transferred to another qualifying family member. In some cases, these funds may even support future generations, such as grandchildren.
This flexibility helps ensure savings are not wasted.
Using Calculators to Build a Plan
If you’re just getting started, education savings calculators can help estimate future costs and monthly savings goals.
Tools from reputable financial institutions can provide a helpful starting point. While they aren’t a substitute for personalized planning, they can offer useful direction.
Planning Today for Tomorrow’s Opportunities
Education planning isn’t about predicting the future perfectly — it’s about preparing thoughtfully.
Whether through a 529 plan, a custodial account, or a combination of strategies, early and intentional saving can help create more opportunities down the road.
If you’d like guidance building an education savings strategy that fits your family’s goals, Portfolio Advisors Inc. is always here to help..
Portfolio Advisors Inc. is grateful to ABC30 and Vanessa Vasconcelos for spotlighting this important conversation in their Watching Your Wallet segment and helping educate couples throughout the Central Valley about building strong, transparent financial habits.
For more financial tips and planning resources, visit our Knowledge Center.
