How to Maximize Your 529 Plan Late Start in 5 Simple Steps

We’ve seen how a 529 Plan can benefit your child and most of the discussions have centered on the fact that we (as parents) will start the 529 college savings when the child was born or shortly thereafter.

However, life does occur and things happen. Some families at that time may not have the means to open one at all or are just not informed that such exists.

In my situation, my wife had just stepped down from her $70,000 a year job so we can focus on her being home with our first child. We knew it was going to be a tough road financially for the next little while. Prior to the birth of our first born though we made sure we were consistent with setting money aside for what become the foundation for her 529 plan.

It’s Never Too Late to Open a 529 Plan

If your child/children are getting to that age of starting middle or high school, you may be thinking it’s too late to start a 529 savings plan. Actually it’s not too late…It’s never too late!

Now by delaying the opening and consistent saving of a 529 college savings plan, the account will not be able to grow as much. Nevertheless, one shouldn’t waive the benefits that come with the 529 plan.

You have more time to save then you think for your child’s college.

Even if your child starts college you can still contribute to a 529 Colleges Savings Plan. You can make monthly contributions if you are able to and hopefully assume a 6% annual investment return.

5 Simple Steps

Opening a 529 College Savings Plan for your child that is older will not allow the account to grow earnings as much due to the fact that you will want the funds to be invested conservatively.

So we will need some boosts to help the fund and account grow with more than just our initial investment. Let’s look at 5 simple steps you can take today to increase

Save One Third of Projected Future College Costs

This may be the most challenging step. I’ve seen though that there are quite a few families that I have talked to that are in a far better off financial situation now than they were when their child was born.

I would suggest using a College Savings Calculator to map out and find out the projected costs of college for your child. The 1/3rd is just a rule of thumb so you don’t specifically have to save that amount.  

Gifts from Family and Friends

As a child when I would have birthday parties I remember getting gifts and then not knowing what happened to them after. Years later I found out that my mother would return most of the gifts (back in the day when you could get cash on the return) and then deposit it into my college fund.

When both my children were born and there were birthday celebrations or even more recent first Holy Communion celebrations……we asked for money.

For your child’s 529 plan, you can ask friends and family to contribute electronically to the account. One thing to note is that gifts received after January 1st of your child’s sophomore year of high school will act as and count as cash support if you were to complete the Federal Application for Federal Student Aid (FAFSA).

If the parents receive cash during a child’s birthday then they can make the deposits themselves to the 529 plan and this type of cash support does not end up being reported on the FAFSA.


We have talked about Upromise in a previous post. Another simple step to beef up the 529 plan is to use Upromise. You earn cash back on eligible purchases. You can apply for the Upromise Mastercard which gives you a 15% cash back bonus on all purchases.

Apply for Scholarships

You can apply for scholarships that are awarded as 529 plan contributions. They scholarship funds will be contributed to a 529 plan that will grow tax-free until it’s time to pay for college.

Private scholarship providers can award the scholarships as contributions to the 529 plan as opposed to writing a check.

Part-time job

Yes I had a 529 plan from my parents when I entered college to use for tuition. However, I also work part-time (full-time during the summers) in an effort to contribute to the cost of college.

It’s not a bad idea to have your child’s part-time job earnings contribute to their 529 plan. The money your child saves will be one less dollar that they will have to borrow with interest in an effort to pay for college.

So again it’s not too late to start on your child’s 529 college savings plan. It’s not the “set it and forget it” mentality as you will need to be a little more creative and think outside the box. But it you are disciplined and are willing to be consistent, then you can add the 529 plan as a viable force to paying your college tuition.

I would love everyone’s thoughts. Please free to comment on some of your ideas on this topic.

Thanks for reading and we will see you on the next one.  

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