Saving for College: MEFA Can Help Families Keep that Resolution
BOSTON [January 23, 2019] - When it comes to New Year's resolutions, an estimated 80 percent of individuals fail to keep them by February. Psychology Today1 says common obstacles to resolution success include ambiguous goals and feeling overwhelmed, discouraged, or unprepared to change.
MEFA knows that many families have resolved to start saving for college this year (or to increase their commitment to saving). With this in mind, MEFA has created six actionable steps to help families achieve their college savings goals.
MEFA's Six Steps for College Savings Resolutions
- Open an account. The best way to save for college is in a designated college savings account. And studies show that children with even a small college savings account are three times more likely to attend college, and four times more likely to graduate.2 If you haven't done so already, open a college savings account for every child in the family. Massachusetts families have two college savings choices with the U.Fund 529 College Investing Plan and U.Plan Prepaid Tuition Program. Both are low-cost, offer tax advantages for saving, and are easy to open by visiting MEFA's college savings plan website.
- Create a budget. Before setting aside a specific amount for college savings, figure out your family's finances. Determine the amounts needed for retirement, living expenses, and an emergency fund. Part of your leftover discretionary income can be used to save for college.
- Establish a college savings strategy. Determine when each child is expected to enter college, and calculate how much time is left to save for college costs. Sign up for MEFA's College Planning Tool and create a personalized college savings strategy for each child in the family.
- Automate college savings. Set aside money into your college savings account every month, preferably with automatic withdrawals from a bank account, or increase that amount if it's already being done. Even a small monthly savings contribution can accumulate and grow over time. The more you save for college now, the less you may need to borrow later on. You can easily link your college savings account to a bank account to set up your monthly automatic savings contribution.
- Suggest college savings as a gift. Suggest to family members and friends that they give the gift of college for birthdays, holidays, and other special occasions. Remind family members how easy it is to contribute, and that even small dollar amounts do make a difference in the long run. And, when your child receives a check or cash, encourage him or her to put it into the college savings accounts.
- Back-to-school checkup. The back-to-school time in late August is a great opportunity to check up on the progress of the college savings plan. Are goals being met and could more be saved? Then check again in January when it's time to make new resolutions.
For more information about setting up your personalized college savings strategy and for more guidance on college savings, visit mefa.org/startsaving.
MEFA is a not-for-profit state authority, not reliant on state or federal appropriations, established under Massachusetts General Laws, Chapter 15C. MEFA's mission, since its founding in 1982, has been to help Massachusetts students and families access and afford higher education and reach financial goals through education programs, tax-advantaged savings plans, low-cost loans, and expert guidance. All of MEFA's work aligns with the ever-present goal to support the independence, growth, and success of Massachusetts students and families. Visit mefa.org to learn more or follow MEFA on Twitter @mefatweets and on Facebook at mefaMA.
1 Why New Year's Resolutions Fail, Psychology Today, Dec. 5, 2018. https://www.psychologytoday.com/us/blog/modern-mentality/201812/why-new-years-resolutions-fail
2 Assets and Education Initiative. (2013). Building Expectations, Delivering Results: Asset-Based Financial Aid and the Future of Higher Education. In W. Elliott (Ed.), Biannual report on the assets and education field. Lawrence, KS: Assets and Education Initiative (AEDI).
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