Saving Now Versus Borrowing Later

April 28, 2023

“When should I start saving for my child’s college?” is a question that comes up a lot, and the simple answer is — now. While there are a variety of savings strategies, it’s clear that investing in your child’s future increases opportunities and earning potential. The choice to save now can pay big dividends later.

Take advantage of any early investment gifts, i.e., birthday money gifted to your child or Meadowlark Savings Pledge funds, and open a NEST 529 account. Then, and this is important, routinely contribute to the account.1 The NEST College Savings Calculator can help estimate how much money you’ll need to combat the rising costs of higher education. Investing those funds into a NEST 529 account gives your money the opportunity to grow. Contributions to a NEST 529 account are made with after-tax dollars, and any earnings grow federally and state tax-deferred while invested.

Some families may consider borrowing later to afford higher education, but that comes with a significant downside — paying interest. When you’re saving, interest can work for you. When you’re borrowing, interest can work against you.

Saving ultimately gives your child wings to pursue their dream career. A NEST 529 account may earn interest and grow so your child can achieve their ambitions.

The act of saving money is not only a habit for parents, grandparents, and guardians to know and understand the importance of — but children too should develop a comprehension of saving. Even at a young age, you can teach your child to be intentional about saving. Set your child up for success by discussing wants versus needs, allowing them to make their own money, showing them how to set savings goals, providing them a place to save, explaining how to track spending, and being open about money.

Higher education doesn’t need to send you or your child into debt. Talk with your children about the perks of saving money now rather than borrowing someone else’s dollars in the future.

1 Regular investing does not ensure a profit and does not protect against loss in declining markets. back

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