Dadvice Weekly #44 / Saving for Education: the 529 Savings Plan
Dadvice Weekly - #44
Nobody knows how much college will cost 18 years from now. Nobody knows if your kid will attend an in-state school or an out-of-state one, a public university or a private one. Nobody knows if they’ll receive scholarships, skip college entirely, enter with dual-credit hours, or change majors three times. Nobody knows if they’ll decide a trade school or a two-year program makes more sense.
That’s where the 529 plan comes in. A 529 is a state-sponsored savings account built for education expenses. You put money in, it grows tax-free, and when it's time to pay tuition, room and board, or other qualified costs, you pull it out without owing taxes on the growth.
That’s why it helps to think of a 529 less as “the account that will fully pay for college” and more as a tool that will be there when tuition is due. One mindset requires predicting a future nobody controls. The other just means setting money aside consistently and letting time do the work. The second one is a lot easier to stick with.
Here’s what we’d recommend to anyone thinking about opening one.
Have a conversation with your spouse first
Before opening an account, figure out what you’re actually trying to accomplish. Do you want to cover all of school? Half? Are you just trying to take the edge off student loans so your kid doesn’t start their adult life buried in debt? There isn’t a right answer, but there should be alignment between the two of you, because every answer has lifestyle implications. Saving for college means choosing not to spend that money somewhere else. It also helps to think through what the next 18 years might realistically look like before you decide on a number.
Do both parents plan to keep working? Is there a chance one stays home for a stretch? Will you stay in your current house? None of it needs to be perfectly mapped out, but having a rough framework makes the savings number feel a lot less arbitrary.
Open an account and keep it simple
Simplicity wins here. You don’t need to spend a lot of time picking investments or trying to outperform the market. Whether you’re invested in something that tracks the S&P 500, NASDAQ, or another broadly diversified index, you’re essentially betting on long-term market growth. For most families, that’s enough.
Resist the urge to overthink it.
If your state offers a tax benefit, take it. In Colorado, CollegeInvest allows contributions to be deducted from state taxable income. It’s not a life-changing number, but free money is worth taking every time.
Start small
A reasonable rule of thumb is that every dollar contributed during your child’s first year of life could become roughly $3 to $4 by the time they turn 18. The closer you get to college, the less time compound growth has to work. That math is pretty motivating when you think about it early enough.
If you’re new to saving, start small. Twenty-five dollars a month may feel like nothing, but it builds the habit, and it gives those dollars time to grow. The account doesn’t care that it started small.
Once you land on an amount, automate it. Don’t rely on remembering. Don’t wait for extra money to show up at the end of the month, because it usually doesn’t. Set it, forget it, and let the system run.
Loop in the grandparents
This one doesn’t get mentioned enough. Grandparents and extended family can contribute directly to a 529, and in some states those contributions are also state tax deductible. More practically: between birthdays and Christmas, the amount of stuff coming through the front door adds up fast. At some point the grandparents run out of ideas anyway. Redirecting even some of that toward a 529 is a gift that actually compounds over time, which is more than you can say for another set of Duplos. Sending a quick family update on where the accounts stand once or twice a year makes the whole thing feel like a shared effort rather than something you’re grinding through alone.
Know what happens if they don’t use it
A lot of people hesitate to open a 529 because they worry the money gets stuck if their kid ends up not going to college. The SECURE 2.0 Act changed this. Unused 529 funds can now roll into a Roth IRA for the beneficiary, up to a lifetime limit. The money isn’t trapped, and knowing that makes it a lot easier to commit to opening one in the first place.
A note for foster parents
You can open a 529 for children in your foster care, and the accounts allow you to change the beneficiary if circumstances change down the road. It’s one small way to invest in a child’s future while they’re in your home, and it costs nothing to set up.
The bottom line
Save as much as you reasonably can while your kids are young. There will always be a vacation, a house project, or a car competing for those dollars. That’s as true today as it will be 16 years from now.
The best time to start was the day your child was born. The second best time is today.
That’s our take. -SW & KC
Dadvice Weekly is Kyle and Skyler—two friends in their thirties, living in Colorado, settling into fatherhood and trying to stay sane. Every Tuesday we share what’s working in our homes: gear we use, routines we’ve tested, ideas we’re trying. It could be a recipe, a product that solved a problem, or just what we’re thinking about as dads.
If you have a tip, tried something we mentioned, or just want to say hi, reply to this email or message us on Substack. We read everything, and we’re always looking for what works. Glad you’re here.