Dear Parents: Follow the 50/50 Rule for College Saving

We do want flexibility while we save, in case life throws us a curveball.

Photo credit: iStock

By Jesse Cramer

After a few real-life conversations and my running the math, I’ve decided that a “50/50” rule for college saving achieves the best of both worlds.

The rule is:

• ~50% of your college savings goals should be saved via a 529 plan.
• The other ~50% should be saved via a taxable brokerage account.

Why is that the case? Let’s discuss what we do and don’t want from our college savings plan.

PS — if you want further background reading on 529 plans, here are some other useful articles…

• 529 Plans: A Complete Guide
• The Important Details Behind 529-to-Roth Conversions

What We Do and Don’t Want from College Savings

• We do want to save for college. Ground-breaking stuff.
• We do want to reduce our income taxes.
• We do want our investments to grow tax-free.
• We do want flexibility while we save, in case life throws us a curveball.
• We don’t want to end up…