The new year is a time of hope and fresh beginnings, when we take stock of another year on the books, mentally shut the door on the past year and resolve to become better versions of ourselves. In fact, at this time of year, our minds are actually psychologically primed to take action — this phenomenon has even been named and studied by professors from Wharton and Washington University. It’s called the “fresh start effect.” As 2016 approaches, Idaho families hoping to see their children or other loved ones eventually go on to higher education should use the approaching new year as a window of opportunity to take one critical action in pursuit of that dream: open an IDeal Idaho 529 college savings account and start saving.
Saving for higher education may seem like a minor matter compared to other financial obligations this time of year, but higher education is one of the best investments that a family can make. In fact, here in Idaho, the average wages for people with Bachelor’s degrees in the middle of their careers are around $20,000 per year higher than people with only a high school diploma, according to a study conducted by EMSI in November. Studies by The College Board indicate that this amounts to over half a million dollars over the course of a career. Given that average rate of return, saving for college is surely among the highest-impact things we can do with our money.
If you aren’t familiar with IDeal, Idaho’s 529 College Savings Program, the benefits are many: Money invested in a plan has the chance to grow, and can later be withdrawn tax-free when used on qualified higher education expenses (such as tuition, fees and some room and board expenses). Students can use the funds at any accredited post-secondary institution in the United States, and if a student doesn’t use all the money in their account, the account owner can change the beneficiary. Saving for college with an IDeal 529 college savings account isn’t just a smart long-term move: Idaho taxpayers can be eligible for a 2015 state tax deduction for contributions made to an IDeal account by December 31st.
Adults who are saving for higher education also help their children and other loved ones set and achieve their own ambitious goals. A study by Washington University in 2010 found that students with a college savings account are up to seven times more likely to go on to and complete higher education, regardless of their account balance. That’s because having a college savings account sends the message that higher education is an expectation, and that it’s an attainable objective.
You can even save for your own higher education goals. Whether you’ve dreamed of getting an associate’s or bachelor’s degree, or even an advanced degree, taking the first step toward that goal by setting up an account in your name is the best way to make that resolution become a reality.
Just like your other New Year’s resolutions, getting started is the easy part: You need only $25 to open an account. But with the option to automatically contribute to the account each month, you can also set yourself up to stay on track the whole year.
By starting to save today, you can give yourself the satisfaction of starting off on the right foot in 2016, and the peace of mind that comes with knowing that a year from today, your children won’t just be a year older —they’ll be a year closer to achieving their dreams.
Christine Stoll is executive director of IDeal, Idaho’s 529 College Savings Program. More information and a full disclosure statement about IDeal can be found online. Please read carefully before investing. www.idsaves.org.