MONEY credit cards

3 Credit Cards That Will Save You Money on Summer Travel

two people on road trip
Jonas Jungblut—Gallery Stock

Make sure you have these pieces of plastic in your wallet before you head out the door.

Travel season is upon us—time to hit the road!

Americans drive an average of almost 1,000 miles a month—roughly the distance from New York to Orlando—from July to September, per a recent AAA Foundation for Traffic Safety and Urban Institute study. We take to the air more often as the weather gets warmer too. All that wanderlust doesn’t come cheap: A gallon of gas will set you back about $2.80, while the average domestic flight costs around $400.

So if you plan to do any traveling over the next three months, consider signing up for one of the following three rewards credit cards. You’ll enjoy 5% back at the pump, lucrative signup bonuses, and the chance to earn free flights. Of course, rewards are never worthwhile if you don’t pay your balance in full each month or utilize more than 30% of your available credit. But if you’re financially ready for a rewards card, these offer a way to save real money.

For Drivers

The card to use at the pump this summer is the Chase Freedom. Throughout the year, this rewards card offers 5% cash back on rotating categories including department stores and restaurants. From July through September, though, cardholders will earn 5% back at gas stations, up to $1,500. You’ll also receive a $100 signup bonus after spending $500 within three months of opening your account.

If you spend $250 a month on gas, you’ll earn about $38. Toss in the signup bonus, plus the cash back from filling up a second car, and you’re looking at a little more than $175. There’s no annual fee, so you won’t be penalized for keeping the plastic in your wallet when the categories change in the fall.

For Fliers

Every frequent flyer should consider one of these: Chase Sapphire Preferred and Barclaycard Arrival Plus World Elite. Both are reward-rich products that offer significant signup bonuses. Determining which card is right for you depends, in part, on what you value in a travel rewards card.

The best way to think about the Arrival Plus World Elite is that it’s a cash-back card for travel purchases. Cardholders rack up “miles” in a number of ways. For example, you’ll receive 40,000 miles after spending $3,000 in the first 90 days; two miles per $1 spent; and a 10% rebate when you redeem miles for any kind of travel charges. A mile is worth a penny, so the signup bonus alone nets you $440 when used toward travel purchases (which include taxis, flights, and campgrounds.) You don’t have to deal with airline frequent flier programs or miles awards charts. Plus there’s no foreign transaction fee and you’ll receive your FICO score with every statement. The $89 annual fee is waived the first year.

The Chase Sapphire Preferred is a bit of a hybrid. You can apply your points as a credit on your card statement for travel at one point per penny, with a 20% discount for booking through Chase. That can boost the signup bonus—40,000 points after spending $4,000 in the first three months—to $500. But you can also transfer your points to frequent flier programs on partner airlines like Southwest and United at a one-to-one rate, so you can take advantage of a particular airline’s loyalty program. You earn two points per dollar spent on travel and dining and gain 5,000 bonus points after you add an authorized user who makes a purchase in the first three months. There is a $95 annual fee, waived the first year.

Check out the entire MONEY Best Credit Cards list here. Safe travels!

MONEY credit cards

Help! I’ve Fallen In Love With Someone Who Has Credit Card Debt

couple doing expenses
John Lund—Getty Images

There is light at the end of the tunnel.

It finally happened. After all the bad dates and heartbreak, at last you’ve met The One, and you’re ready to start down life’s road together. Except your new love is carrying one piece of baggage you hadn’t counted on: credit card debt.

You’re not alone. In a new NerdWallet/Harris Poll survey of more than 2,000 adults, 35% of those who combine at least some part of their finances with a partner brought credit card debt into the relationship. (Men are more likely to do so than women, by the way). Millennials are particularly likely to commingle I.O.U.s and romance, with 45% of those between the ages of 18 and 34 toting a revolving balance. In fact, millennials were more likely to have credit card debt than student loan or car payments.

On average, people entered relationships with $4,100 in credit card debt, and 25% of couples with at least one indebted parter reported experiencing negative consequences. One-sixth of respondents said debt kept them from doing something they planned on, such as buying a home or taking vacation.

The findings dovetail with MONEY’s research into couples and financial harmony. Our recent poll of 1,000 millennials and baby boomers found that two in 10 couples regularly fight about credit card debt. Millennials are more tolerant of debt than older generations, with 40% saying a lot of debt is a romantic turnoff, versus 60% of boomers who said the same.

If you—or someone you’ve fallen in love with—is struggling with debt, here’s how to keep it from ruining your relationship.

Don’t hide it. “Being open and transparent about your debt is very important,” says NerdWallet credit card expert Sean McQuay. “When you’re dating someone and you have the conversation about introducing them to your crazy parents, you also need have the talk about your debt.”

By opening up about debt early, you won’t cause a fissure down the line. And once you put your cards on the table, you and your partner can come up with a plan for getting out from under. One strategy suggested by Beverly Harzog, author of The Debt Escape Plan, is to start paying off the smallest balances first. The math may say to go after the card with the highest interest, but unless there’s a big difference in the two cards’ rates, it’s often more helpful to get the mental boost from clearing a debt so that you sustain your repayment plan.

Transfer your balance to a cheaper card. If you’ve squeezed every last penny from the budget and still can’t seem to make much headway, one powerful tool is a balance transfer card. MONEY recommends the no-annual-fee Chase Slate. Not only is there no interest on purchases and balance transfers for 15 months, there’s also no balance transfer fee if you move your debt within two months of opening the card.

More from the Love & Money series:
Poll: How Boomer and Millennial Couples Feel About Love and Money
Why Couples Need to Get Financially Naked
The Single Most Important Money Talk for Couples
How Money Can Improve Your Sex Life (It’s Not What You Think)

MONEY First-Time Dad

What Millennials are Getting Right About Retirement

hand holding gold star trophy
Jeffrey Coolidge—Getty Images

And what this generation still doesn't understand about investing for their future.

I was born between 1980 and 2000. This simple fact, over which I had no control, means that I am a millennial — a term that seems to become more loaded with each passing day.

Depending on whom you ask, millennials are lazy, highly educated, entitled, outwardly focused, technologically savvy, impersonal, cheap, indebted. We also have sophisticated palates and an aversion to risk. We’re afraid to commit, apolitical, and unmoored to institutions. And we love craft everything.

Ascribing an ever-expanding series of contradictory descriptors, however, has the effect of making millennials seem alien. Yet the truth is, young professionals today are simply rational actors navigating significant financial hurdles while balancing short and long-term goals.

Take retirement. I’m about 36 years from turning 65, which means I have a number of competing interests. I know that every dollar I put away in my 401(k) will help me replace my income when I no longer work (especially if it’s matched by my employer). But each dollar saved is a dollar not spent on child care or rent or paying down student loan debt. My wife and I are conscientious about our finances, but our income can be stretched so far.

Other millennials are struggling with these choices too. But all things considered, we’re actually doing quite nicely — contrary to the prevailing narrative.

T. Rowe Price recently released its exhaustive Retirement Saving & Spending Study and found millennials are socking away 6% of their annual salary, while boomers saved 8%. Meanwhile four-in-ten millennials are saving a higher percentage of their income in their 401(k) compared to a year ago, compared to 21% of boomers. Moreover three-quarters of millennials track their expenses carefully and 67% say they stick to a budget, both higher than boomers.

Young savers are also more open to nudging than their older colleagues, a sign of our humility when it comes to financing retirement.

Almost half of millennials who were auto-enrolled into a 401(k) plan wished their bosses had penciled them in at a higher rate. (The prevailing introductory savings percentage is 3%.) Only about a third of boomers wished the same. More than a quarter of millennials said they wouldn’t opt out if the auto-enrollment level was set at 10% or greater.

What kind of investments are millennials being enrolled into? According to Vanguard’s How America Saves report, which looks at the savings habits of almost 4 million participants, eight-in-ten new retirement plan entrants were solely invested in a professionally managed allocation. That means they put their money in a professionally managed target date fund, a balanced fund, or a managed account advisory service that customizes investor portfolios.

And while auto-enrollment may put new workers at a measly 3% contribution, 70% of millennials increase contributions annually. Moreover almost 40% of plans default to 4% or more compared to 28% in 2010.

Of course, there is room for improvement.

Starting early is a necessary element of achieving your retirement goals, but not sufficient. If you save 6% of your income, according to Vanguard, you’ll take have about $275,000 by the time you hit 65 (assuming a 4% real rate of return and an annual salary growth rate of 1%.) Putting away 10% will net you almost $460,000. So millennials could stand to save more.

Millennials would also do well to have a firmer grasp of what it is they’re actually investing in. For instance, almost 70% of millennials who use target-date funds agreed with the statement, “Target date funds are usually less risky than balanced funds.” This isn’t really accurate.

How risky a target date fund is depends largely on what “target date” you choose. For instance the Vanguard Target Retirement 2050 Fund — designed for younger workers who won’t retire until around the year 2050 — consists of about 90% equities. A traditional balanced fund, on the other hand, generally holds about 60% to 70% in stocks.

Millennials also don’t appreciate the diversification offered by a target date fund. Because each target date fund invests in a wide array of stocks, bonds, and other assets, these vehicles are designed to be a one-fund solution. Yet almost 80% of those same millennials agreed with the statement “It’s better to hold additional funds in your 401(k) than just a target date fund.”

Then there are those millennials who aren’t saving at all.

While it’s easy to say they lack prudence and acquiesce to the immediate pleasure of money, it’s more accurate to note that they probably cannot afford to save. The median personal income of non-savers is $28,000, almost $30,000 less than savers. Non-savers are not only more likely to have student loan debt, but their balances are higher.

My wife and I don’t save nearly enough for retirement, but then again, we don’t save enough period. Raising a small child in Brooklyn doesn’t help, neither does our chosen professions in the notoriously high-paying education and journalism sectors.

But we do what we can and when other expenses fall off (like when our son starts school) or we enjoy a nice raise we’ll direct that cash flow into our retirement and emergency funds. Millennials, after all, are practical.

MONEY stocks

The Risks of Banking on Bank Stocks

Gregory Reid; prop styling by Renee Flugge

Be cautious with this sector as rates are set to rise.

This sure seems like a great time to bet on the financial sector. Seven years after the credit crisis, banks are healthy again, says Morningstar analyst Dan Werner. In fact, regulators are finally letting them boost dividends and share buybacks. While S&P 500 profits are flat this year, financial earnings are forecast to grow 11%. And in theory those profits might be even stronger once interest rates rise, since borrowers will no longer be able to refinance into ever-cheaper loans.

Yet despite all of that, there’s trepidation—and rightly so—when it comes to this sector, which let investors down so badly during the global financial crisis.

For starters, investors fear regulations, says BlackRock’s global chief investment strategist Russ Koesterich. Banks are still paying for the sins of the Great Recession, through fines, settlements, and increased oversight, which lead to higher costs. J.P. Morgan Chase alone incurred $487 million in legal fees last quarter.

Moreover, as yields rise, there are no assurances bank profits will benefit. The Federal Reserve controls only short-term rates. “One risk is the Fed raises short rates, yet there’s no sign of inflation,” which affects long rates, says Mark Luschini, strategist for Janney Montgomery Scott. If that happens, demand for longer-term bonds could rise, pushing prices higher but yields lower. That would narrow the gap between what short- and long-term bonds pay, crimping profit margins, as banks borrow short term to lend long.

Until the Fed hikes and you see how long-term rates react, “financial stocks are basically in a holding pattern,” says S&P Capital IQ’s Erik Oja. So it’s critical to hold the right types of financials in this unpredictable environment. These steps will help you find them:

Go with a proven winner. Follow the Hippocratic oath of investing: “Avoid companies with a proven record of screwing up,” says Chris Davis, manager of the Davis Financial Fund. One way is to ignore firms with overly complicated ways of making money.

The biggest holding in Davis’s fund is Wells Fargo WELLS FARGO & COMPANY WFC -0.53% , one of the few banks to emerge stronger from the credit crisis. Unlike other big banks, which have extensive operations in investment banking and fixed-income and currency trading, Wells has a simpler model. It’s the largest collector of retail deposits. That cheap access to capital allows the lender to be highly profitable without taking undue risks. Indeed, the company’s return on equity—a gauge of how efficiently a firm generates profits—is more than twice as high as Bank of America’s.

Think local. Like Wells, most regional banks “just specialize in taking in deposits and making loans,” says Jason O’Donnell, chief investment officer for the Bluestone Financial Institutions Fund. What’s more, a greater percentage of their deposits are in accounts that don’t pay interest—think personal and business checking—compared with the major banks. Rising rates won’t affect that business. Smaller banks are also less reliant on installment debt and fixed-income trading, which are vulnerable to rate increases, O’Donnell says. For low-cost diversification, go with SPDR S&P Regional Banking ETF SPDR SERIES TRUST S&P REGIONAL BKG ETF KRE -0.02% . The fund holds 89 stocks in equal proportion, so the largest player—U.S. Bancorp, which is close to a major bank—doesn’t dominate.

Play defense. The best-case scenario for this sector: The Fed raises rates because the economy is doing so well. And the worst case? The act of raising rates slams the brakes on the economy, slowing lending.

What type of company can thrive even when rates rise or when the economy slows? Insurers. Their business isn’t dependent on a strong economy, and insurers profit from higher rates since they pocket interest income between the time they collect premiums and pay out claims.

Plus they “have demographics on their side,” says Oppenheimer chief investment strategist John Stoltzfus. As global living standards rise and as baby boomers age, demand for life insurance and annuities will only grow, he says.

Shop on price. PowerShares KBW Insurance ETF POWERSHARES ETF II KBW INS PORT KBWI -0.25% charges only 0.35% in annual fees. And the average stock in this portfolio has a price/earnings ratio of just 11.7. That’s 25% cheaper than P/Es for the broader financial sector.

Read next: By This Measure, Banks Are Safer Today Than Before the Financial Crisis

MONEY First-Time Dad

3 Financial Lessons For Dads on Father’s Day

Brightcove:

You may want a tie, or a car. But you should know these three things this Sunday.

One day last August, my then six-month-old son fell face first from his swing onto the wooden floor half-a-foot below. Luke was a mobile tyke even then and I had forgotten to strap him into his seat, despite repeated instructions from Mrs. Tepper who had left him in my charge an hour earlier.

Panic ensued. I rushed into his room after I heard the thud and consoled my understandably miserable infant. A bump quickly rose on his forehead and I phoned our doctor thinking I had caused serious and permanent injury. The pediatrician asked me (in that tone doctors have when you call them off-hours for questions apparently beneath their dignity) if Luke was vomiting or unconscious. No. Any kind of bleeding? No. Keep an eye on him, but he’s probably fine. Which he was.

But I spent the rest of the night in silent terror as the bump deepened. When he finally went to sleep that night, I snuck into his room and put a finger beneath his nose. Yes, he was still breathing.

Fast-forward to last month. Luke had determined to test the limits of his physical universe and ran headfirst into the side of our bathtub. He came away with a bloody, swollen nose. Mrs. Tepper called the doctor for instructions (and a dose of vague condescension), while I tended to Luke. But there was no panic, no unease, no nagging fear that our son had endured some critical blow. I didn’t feel the need to check his breathing in the middle of the night. Parenting, like most things, improves with time.

The same is true of your ability to deal with money. I had just started at MONEY when Mrs. Tepper became pregnant, so it’s not as if we had ample time to set up an emergency fund or sketch out a meaningful budget before his birth. Over the course of our first full year as parents, we’ve had to learn the finances of parenting—even if one of us writes for a personal finance brand.

Here is some of the hard-won wisdom I’ve gleaned from my sometimes beautiful parenting grind.

You’ll Spend More Than You Think

There’s a strange cognitive dissonance that new parents must embrace. The decision to bring a child into the world, at least in my case, tends to be uninformed by finances. Are we ready to care for children is more of a question of values and love than a cold calculation of what you can afford. We didn’t estimate the weekly cost of child care, how long Mrs. Tepper would take off for maternity leave, how much of that was paid, and how we’d afford rent and food without her paycheck. We didn’t look into how a newborn would inflate our insurance premiums, which of our policies should cover the tyke, or how much a delivery would set us back. And we were completely ignorant of the price tag on all the day-to-day items, from strollers and cribs to diapers and wipes, that he would need. We both had jobs and figured we’d figure it out.

But bearing a child is an intimately financial decision, especially since our society does so little to palliate the pocketbooks of new parents (whether it’s paid leave, child or health care.) We’ll likely spend a quarter-million dollars on Luke before he hits college-which could easily cost another quarter-million dollars. How is it even possible to spend that much?

Experience informs. Putting aside child care, which cost us more than $15,000 over the past 12 months, it’s not terribly difficult to see where the money goes. Not only did his stroller run us close to $1,000, but we just spent another $50 on something called the Parent Organizer, a device that attaches to the stroller and holds the coffee you need to drink to stay awake because you haven’t slept well in over a year, and some fabric cleaner that removes spilled milk (and coffee) from the stroller. We spent about $1,000 this year on diapers and wipes and creams that make him happy and don’t cause his skin to break out in hives. Our credit card statements are filled with hundreds of similar purchases.

I’m glad we didn’t budget out our lives before we decided to have Luke. Parenting shouldn’t be a decision based solely on affordability. Life is too short. But, in case you were curious, this is why your friends with kids aren’t particularly enthusiastic about your two-week excursion to Lisbon.

Be an Equal and Honest Partner with Your Spouse

Couples tend to obfuscate when it comes to discussing money and finances. Most avoid the topic, as an American Express survey found, while others lie to their partners about money. While you may know that you need to chat about budgeting and debt and spending, as a recent MONEY survey found, the actual process of doing so can be less than enjoyable.

In the grand scheme of things, Mrs. Tepper and I haven’t been adults for all that long. We’ve been out of grad school for about three years, married for almost two, and parents for 17 months. Crafting budgets that account for all of the expenses surrounding Luke is hard enough, not to mention the difficulty coming up with a plan for saving for college without going broke. For a few pointers, I turned to CFP Board consumer advocate Eleanor Blayney.

First and foremost, says Blayney, learn what money means to your spouse. “For some it means security, so they’re looking to save, while for others it offers prestige.” If your husband or wife is a hoarder or a spendthrift, there’s often a reason why. Knowing where your partner comes from can help decrease tension and clarify his or her point-of-view.

Next Blayney recommends you and your spouse go into separate rooms and estimate how your after-tax income is being spent. That is, each of you should write down how much you believe you’re putting toward three buckets: 1) fixed, non-variable expenses (like your mortgage and child care); 2) non-discretionary, variable expenses (food and transportation, for example); and purely discretionary expenses (like entertainment).

After you’ve complied your list, Blayney suggests, “pour a glass of wine and compare notes. Identify real discrepancies in your outlook and find common ground.”

Everyone should be involved in financial decision-making. When the dynamics of a family evolve, spouses often take different domains of domestic responsibility, from managing the children’s homework to paying the bills. If one spouse is completely removed from any understanding of financial decision-making, or appreciation for long-term goals like retirement, conflicts can metastasize with time.

Therefore, be completely transparent about your financial choices. Both spouses should appreciate the savings rate and investing choices that are being made and what benefits this long-term planning will produce. Think of it as “marriage insurance.”

“Focus on common goals—whether it’s a boat or retirement, “says Blayney. “You’ve got to decide as a couple how much to save together.”

Consider Your Mortality

If you have a child and a spouse who depend on your income to support their lives, you need life and disability insurance. The concern for a lot of parents can revolve around which type of insurance to get and for how long. (Not to mention confronting your inevitable demise.)

“I’ll have clients who have gone to buy insurance and the broker asked how much can you afford?” says Dallas-based financial coach and planner Katie Brewer. “They’ll come away with much more than they need.” That’s money that could be put to better use elsewhere. The best route is to buy a 20-to-30 year term policy that covers about 10 times your income. You should only worry about covering your income for a certain period of time, and term insurance is the cleaner alternative. You can most likely to find low cost options through your employer, but you may be restricted in the amount you can insure. Check out Mint.com’s life insurance calculator for more coverage selections.

When you sign-up, don’t forget disability insurance. Like life insurance you can generally find low-cost options in your benefits package. If you can’t, look to reduce the price on an individual policy by delaying the period before you receive benefits – from three months to six. Brewer also recommends looking for a group discount through an alumni or professional group – she’s insured through the Financial Planning Association. Keep in mind, whatever Social Security disability benefits you receive will be subtracted from your payout, which is also subjected to taxes. That’s why maintaining a robust emergency fund is so vital.

Read next: The 3 Most Important Money Lessons My Dad Taught Me

MONEY Love and Money

Is Financial Responsibility a Turn-On?

MONEY's millennials talk about the importance of financial fitness in romantic relationships.

We may not put it in our Tinder profile, but millennials do care about a potential mate’s financial fitness. We care about it so much, in fact, we rank financial know-how higher than sexual prowess as an important factor in a long-term relationship. Millennials grew up with the 2008 financial crisis, so we know money doesn’t grow on trees.

 

MONEY

Check Out the Summer’s Best Credit Card Deal

150601_FF_LucrativeCC
Mike Kemp—Getty Images

A good card just got a bit better for a limited time.

If you’ve ever considered applying for a Discover credit card, now’s the time to pull the trigger.

All new customers who signup for a cash-back Discover card in June and July, which includes the it and it Chrome cards, will automatically have their rewards doubled at the end of 12 months. (The Discover it is a MONEY Best Credit Card.) The announcement comes on the heels of the February release of the Discover it Miles card, which doubles the rewards for all customers at the end of a year.

This can be a profitable proposition for new cardholders. Take Discover it, which offers 5% cash back on categories that rotate every three months. From July to September, the first period new cardholders can participate in, customers receive 5% cash back on all purchases at Amazon.com, home improvement centers, and department stores, up to $1,500. The juiced-up categories for winter will revolve around holiday shopping, and the beginning of 2016 may once again reward gas purchases, as in 2015. Normally if you spent the maximum over the course of a year, you’d earn $300; now it’s $600. A 10% return on shopping you would have done anyway is especially valuable in this low interest rate environment.

Cardholders also earn 1% back on unlimited purchases that don’t fall into the 5% categories and receive a $50 cash back bonus when you refer a friend. That’s doubled too, as is the card’s shopping portal, Discover Deals, where you can earn revved-up rewards at hundreds of retailers. Right now Discover customers can receive up to 10% off of their Hertz rental, for example.

And there’s no annual fee, so you won’t be punished once the extra rewards period runs out.

MONEY First-Time Dad

How to Make Saving for College Less Impossible

Luke Tepper

Use a tool that not that many people know about.

Four-fifths of adulthood is negotiating competing interests. The other fifth is whisky gingers.

One example: paying for college. As a pair of 29-year-olds with graduate degrees who left university at the peak of the higher education bubble, only to descend into the depths of a great recession, my wife and I have a combined student loan bill between five and seven figures. We also have a 16-month-old whom we will drop off at college orientation day in 17 short—or, if we don’t start getting more sleep, long—years.

The word that comes to mind to describe the feeling of tackling historic education debt while saving for your son’s college tuition while planning for retirement, not to mention the rest of life’s expenses, is not euphoria. And Mrs. Tepper wants to double the number of our dependents in the not-too-distant future.

Fortunately, since misery loves company, my family isn’t the only one fretting about the future. In fact paying for college is the biggest worry for those with children under 18, per a Gallup survey.

At times it seems that even the most conscientious and prudent families can only hold their finances together with mud and spit. But there is one valuable arrow in my quiver, only most people aren’t aware of its existence.

Two-thirds of Americans don’t know what a 529 plan is or does, per a recent Edward Jones survey. Even among those earning six figures, 42% couldn’t pick the college savings tool out of a lineup. Perhaps that’s why more than four out of five people surveyed say they cannot afford the cost of college.

Financing any portion of your child’s education is difficult enough. But it’s even harder without this vital tool.

A 529 plan is basically an IRA for college savings, as MONEY explains here. You put money into the account, named after the section in the tax code that created them, and select how your contribution is to be invested. The choices generally revolve around how aggressive (think stocks) you want to be and how old your child is. The money grows tax-deferred and isn’t subjected to Uncle Sam’s treatment when you withdraw it to pay for education expenses. Some states also allow tax deductions on contributions (you can find a list here). Most plans are sponsored by states, but you don’t have to invest in the state you live in.

What should you look for in a plan? I posed that question to Jeremy Thiessen, a senior director with TIAA-CREF Tuition Financing. He boiled it down to three considerations:

Taxes

“Tax benefits are one of the best reasons to choose your home state’s 529 plan, so review that plan first,” he says. Fortunately for me, New York offers a $10,000 deduction on contributions for joint filers, $5,000 for single.

If your state doesn’t offer tax breaks, and even if it does, you’ll also want to take into account the two other key considerations, costs and investment options.

Costs

Investing through a 529 comes with fees: fees for advisers, program management, and the investment themselves. Just as with mutual funds, higher costs lower your returns. In general, you want to look for low-cost plans that invest in index funds. You can find a tool here to compare plans costs and tax savings. My 529 option, for instance, charges $16 per $10,000 invested, which is pretty good.

Investment Options

“You want to make sure that your 529 plan offers investment choices that suit your timeline and risk tolerance,” Thiessen says. By the time Luke goes off to college, the total cost will be close to $160,000 for a four-year in-state school. If I want to pay for a third of that, I’ll need about $53,000, which I won’t be able to amass from savings alone.

By starting early a 529 plan early on, you give yourself the chance to take more risk while your kid is still young. My plan works like a target-date fund. For the first five years or so, I’ll own only stocks. As Luke ages, the portfolio adds more bonds to smooth out ups and downs. This tool at Savingforcollege.com helps you put into perspective how much you’ll need to save and which plan offers the best path to get you there.

There are other do’s and don’ts to keep in mind. Financial planners will tell you to save for retirement before you start putting money away for your kid’s college, since you can borrow for one and not the other. But starting a college fund early, even if you just contribute a month’s worth of coffee expenses, will go a long way. You don’t need to foot the entire bill; it’s nice if your tyke has some skin in the game.

As I teeter on the precipice of 30, I’m easily distracted by the daily errands and deadlines that are right in front of my nose. But by picking a low-cost college savings plan and contributing to it regularly, I’m slowly completing one of the most important jobs I’ll ever do: helping my son earn a degree.

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