Happy Daycare Liberation Month!
August 21, 2017
By Suzanne Fetky, vice president marketing at Ascensus College Savings
We know it’s not a real holiday, but for parents of young children in daycare—it should be. With school starting sometime between August 1 and Labor Day, many families—including mine—get to experience the joy of no longer writing that weekly check to a daycare provider.
According to the 2017 Cost of Care Survey by Care.com, the average cost for one child in day care is $211 a week. It turns out that this is one case where my child is absolutely above average. This cost can vary dramatically from state to state, but at roughly $850 a month, that is a huge expense for families to bear.
If you are one of those families, congratulations on this exciting milestone! I’m sure you have plans for at least some of that money, I know I do. Part of my plan is to allocate some of the savings into my son’s 529 plan account. I save regularly though payroll direct deposit, and will increase the amount per paycheck. Here are three reasons why you should consider taking some of it and investing in a 529 account for your kindergartener:
- A little goes a long way: Taking $100 a month that would have been spent on daycare and putting into a 529 plan instead can potentially turn into over $25,0001 for college. Use our College Savings Planner to estimate what is possible for your family.
- The power of compounding: According to our annual college savings trends report, families who open an account and start saving early in a beneficiary's childhood are often in a better position to grow their savings. Our data suggests that account owners with beneficiaries ages 16 to 17 who had the foresight to begin saving early have now accumulated an average account balance of $31,460.2
- It’s easy to get started: Many plans accept contributions of as little as $25 from anyone who wants to add money to the account. Money can generally be contributed through checks, one-time or recurring online bank transfers, and even through payroll direct deposits. See what kind of plan your state offers and the benefits offered.
Starting school is an exciting time for families—saving for college can help ensure that feeling lasts long into the future. Save now, because just like the first day of kindergarten, the first day of college will be here before you know it.
1Data obtained using the College Savings Planner with the following assumptions: Child’s current age is 5; a contribution of $100 per month; 5% hypothetical annual rate of return.
2Ascensus College Savings Platform, as of December 31, 2016.