A 529 plan is an investment vehicle that you can put after tax dollars in for your child’s education.
For example, you take $1,000 from your checking account and open a 529, pick a mutual fund, and that money grows TAX-FREE until your child needs it.
It was originally made to be a savings plan for college but can also be used for private school before college.
Why is this amazing? Well, your money grows TAX-FREE! When you need that money, you don’t pay any TAXES! That is the amazing part!
Here’s another amazing part….most states will give you a TAX-BREAK for opening a 529! I put $1800 in my son’s 529 in 2018 and got approximately a $200 tax break. That’s about an 11% return on my money immediately.
What if you put too money in your 529 (that would be a heluva an awesome problem to have)? Well, you can use that money for your other kids.
What if I don’t have kids? Consider yourself lucky, but the 529 doesn’t apply to you.
Trust me, your future self will thank your current self profusely if you use your commission to open a 529 plan instead of blowing it on a 40 year old boat.