We reached out to our group of readers and asked them for their top tips on ways to make use of Christmas bonus cash. Here's what they said.
One particular method people use their holiday bonus is to set it aside for important purchases in the future. If you have kids, it's simple to postpone saving for a college education, yet you have a certain amount of time during which you can start saving and invest before your kids graduate from high school. Setting up a 529 plan account is a fantastic solution to get your educational savings going on the right foot.
A 529 plan lets you invest money in a tax-deferred account and minimize tax on profit and gains as the funds accrue and your kids approach high-school graduation. Furthermore, distributions from a 529 plan are free from federal income tax as long as you apply the earnings for qualified academic expenditures. 529 plan investments are typically treated as being owned by the parent or guardian instead of the student, and that can have positive financial-aid effects too.
You need to take care and stay clear of high-fee programs, however a wide variety of options around the country give you lots of budget-friendly alternatives that will let you take full advantage of how far your college savings will go over the long term.