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New and Expecting Parents: Plan Now for Future Financial Needs

 
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Expecting a baby can be one of the most exciting times in life! It’s also the perfect opportunity to consider and plan for future financial needs, including those of higher education costs. The Education Plan®, New Mexico’s 529 college savings plan, provides an opportunity to save for future education costs. If you start early, when your child is born, the power of compounding goes to work for you. Investing, as with many things in life, benefits from an early start.

Evaluate Your Budget

Even before your child is born, you can start planning for the future. Every person’s individual budget and needs will vary. What is important is to capture necessary or mandatory costs within your budget and determine how much you might be able to set aside and contribute to future savings. Reevaluating your budget periodically is important, especially when new life changes occur, like expecting a new baby.

Prioritize Saving

Investing early may also help develop disciplined spending and savings habits. According to the CSF 2022 State of College Savings Survey, 65% of all parents were saving for their child’s higher education; and 46% of all parents had saved at least $5,000 per child. Additionally, 29% of all parents are saving in a 529 higher education plan; and three-quarters of those parents are saving through recurring – annual, quarterly or monthly – contributions. Focus on your budget, cut expenses where possible and turn extra funds into additional contributions to savings, such as your 529 plan(s). One of the best ways to save for higher education is to open a tax-advantaged 529 education savings account with The Education Plan. It requires no minimum contribution and can be opened at any point in your child’s life – even at birth. It’s never too early to start saving for higher education costs. You can minimize the need for future debt for you and your child for higher education needs with a 529 plan. Qualified withdrawals and contributions are free from federal income tax, and earnings are compounded, so your investment grows as your child grows. For those who live in New Mexico, you may also deduct your contributions to your 529 account with The Education Plan from your state income tax if the money is used to pay for qualified education expenses.

Contribute Regularly

The sooner you start saving for future education costs, the more options your child may have when they reach college age. 529 plan savings may also reduce your need to borrow and incur debt for higher education costs. Apart from the tax advantages, The Education Plan makes it easy to contribute. You may open your account with The Education Plan with any amount and contribute as much or as frequently as you like or are able. You may contribute lump sums, such as year-end savings, tax refunds, bonuses, or inheritance; or contribute more regularly through automatic withdrawals from your paycheck. Another way to save money now for your child’s future higher education expenses is to inform grandparents, friends, and other relatives that they can also to add to the fund. The Education Plan, allows for easy gift-giving using Ugift. You can provide family and friends with your unique Ugift code that they can use to contribute to your account quickly and easily.

Stay Up-To-Date on Rising College Costs

College costs generally rise year over year. Regular contributions from you and your loved ones will help to keep up with the rising costs by saving now. Over the last 10 years, published in‐state tuition and fees at public four‐year universities increased at an average rate of 2.2% beyond inflation, according to the College Board. The average total cost of college for a full‐time, in‐state student at a public four‐year university is over $27,000. The funds in a 529 education savings account can be used to cover a variety of education expenses, such as tuition and fees, room and board, textbooks and required technology. These “qualified education expenses” can be used at 4-year colleges and universities, community colleges and technical schools, and more, as long as your child is enrolled part-time.

To learn about The Education Plan® visit The Education Plan.

 

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For more information about The Education Plan, call 1.877.337.5268 or view the Plan Description and Participation Agreement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You also should consult a financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plan’s features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Education Plan is administered by The Education Trust Board of New Mexico. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-today operations, including investment advisory, recordkeeping and administrative services. The Education Plan’s portfolios invest in: (i) mutual funds; (ii) exchange traded funds; and/or (iii) a funding agreement issued by New York Life. Investments in The Education Plan are not insured by the FDIC. Units of the portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the portfolios you choose. You could lose all or a portion of your money by investing in The Education Plan depending on market conditions. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.

Ugift is a registered service mark of Ascensus Broker Dealer Services, LLC.

The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

All other marks are the exclusive property of their respective owners.

Not FDIC-Insured. No Bank, State or Federal Guarantee. May Lose Value.