Put Your 529 Savings on Autopilot This Year


Put Your 529 Savings on Autopilot This Year


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It’s a fact of life that we like to instill in our children: Good habits lead to positive results, eating well and exercising regularly contribute to better health, studying well can lead to better grades, and going to bed early will leave you better prepared for the next day. But do they know that the good habits they establish in life can also benefit their loved ones? That’s a lesson they’ll learn by example. And there’s no better example than seeing how regular contributions you made to a 529 plan over time led to their financial well-being by paying for their education expenses and lessening their debt.

Hack Your Habits with a “Nudge”

One way to get into the habit of regularly contributing to a loved one’s 529 plan is simple psychology. A dietary example would be putting fruit at eye level as an option rather than banning junk food. This concept is explored in the best-selling book “Nudge: Improving Decisions About Health, Wealth, and Happiness” by legal scholar Cass Sunstein and Richard Thaler, winner of the Nobel Prize in Economics.

So, how can you put nudge theory into practice to help you get into the habit of regularly making contributions to a 529 plan? The answer is simple, and you’re probably already doing it in other areas of your financial life. One example would be those automatic 401K contributions deducted from your paycheck. Doesn’t that increase your participation in savings? If you have transaction alerts on your credit card or banking app, those are nudges, too. You can apply those simple habit-forming actions to 529 savings by setting up recurring automatic contributions into your account with The Education Plan®.

How to Put Your Contributions on Autopilot

As you discovered when you opened your 529 account, you’ve got a lot of options for how you can make contributions. Two simple options that will help you put your contributions on autopilot are:

  1. Payroll Contribution – if your employer offers it, you can contribute to your 529 Plan directly each time you get your paycheck, similar to your 401K. If your employer doesn’t offer it, mention it to your HR team. It’s easy to set up and can help all employees save more.
  2. Automatic Investment Plan (AIP) – schedule recurring contributions from your bank account. This option is excellent for retirees or grandparents who are saving for grandchildren, as well as anyone who doesn’t have an automatic payroll contribution option at work. And getting it set up is simple! Simply log in to your account to get started.

Benefits of Automating Your Contributions

  • Dollar Cost Averaging – As the adage goes, “slow and steady wins the race.” The same concept can be applied to investments. Markets can be volatile, which often means that shares in your 529 plan could be available at lower prices, and when you purchase those shares at a discount, your autopilot 529 contribution can buy more shares than it otherwise would. This is known as dollar cost averaging, and while it’s no guarantee for success, it helps reduce the risk of losses due to market ups and downs.
  • Compounding - Saving money is more than just setting aside funds. It's about putting those funds to work for you over time. One of the best benefits of automating your 529 contributions is the potential for steady growth through compound interest. When the earnings from your plan are added to your principal, it forms a more extensive base on which future earnings can accumulate. The longer your money is invested, the more compounding works for you.

Start Small and Increase Your Autopilot Contributions Any Time

You can increase your regular contributions over time when you set up recurring automatic contributions, allowing you to ease into the plan and save more when it’s convenient. This “nudge” also takes the “willpower factor” out of the equation and allows your plan to benefit from dollar cost averaging and compounding interest.

Remember, it’s never too early or too late to develop good savings habits. Log in to your account with The Education Plan to set up automatic contributions today.


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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.

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

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