How to Grow your 529 college savings with Collegebacker shopping for every day things
If you’re an online shopper you can easily grow your child’s college fund when shopping. Simply sign up with CollegeBacker 529 college savings plan. Then, every time to shop at selected merchants a percentage cash back gets deposited into the 529 plan. Here’s how:
Table of contents
- Here’s the deal:
- Other Ways to Earn Backer Bucks
- Collegebacker Cost
- How to Save with Collegebacker
- What is a 529 Plan?
- What is Collegebacker?
- Missing Financial Opportunities
- Your community can help
Save for college shopping at Walmart and other merchants with Collegebacker
Here’s the deal:
CollegeBacker is a 529 college savings plan that allows users to grow their child’s college fund through either direct deposit from another bank, Venmo, PayPal, contributions from friends and family, or through cash back shopping.
If you shop online, CollegeBacker rewards you for it. CollegeBacker gives you what they call Backer Bucks. Also known as cash back rewards program. Thus, when you shop at any of their online merchants – which includes Walmart, you earn Backer Bucks. You then deposit your Backer Bucks earnings into the 529 account, and therefor grow your college savings funds.
Here is a screenshot of some of the other retailers you can earn Backer Bucks with to fund your college savings plan:
Other Ways to Earn Backer Bucks
Its not just about shopping though. Users can also earn cash rewards by downloading and trying out mobile apps, refinancing student loans, accessing online learning programs, doing taxes, or signing up for other web or app-based services.
All managed investment plans have a fee unfortunately. These fees are the result of management, transfers, and other overhead fees. However, CollegeBacker fee structure allows families to choose their own monthly fee, and can start at $1. Compared to other 529 investment plans, CollegeBacker is more affordable.
Another upside to CollegeBacker is that there is no cost for the 529 gifting program or the cash back rewards program. In addition, the current CollegeBacker promotion gives first month free when you sign up.
Overhead fees are also lower than brokers and traditional advisors, as CollegeBacker is a robo-advisor platform that focuses on education savings.
Additionally, it is tax free investing.
How to Save with Collegebacker
Time needed: 5 minutes.
Guide to Saving with CollegeBacker and earning Backer Bucks
- To start earning Backer Bucks first Download CollegeBacker
Enter your name, Email, Password and click Get Started
- Choose type of savings account
You can either open a new 529 savings plan, or if you already have a 529 plan you can combine them. Just enter the name of your existing college savings plan.
Alternatively, you can start saving with a Backer Safe, an FDIC-insured savings account.
- Enter your child’s name or choose “i’m saving for a future child”
ideal option to add to baby registry
- Choose an avatar
- Answer a few questions about your financial goal
Enter how much you’d like to save
how often – once, monthly or annually
Pick a day to transfer deposits and make a contribution
Note: Collegebacker will match $15 after you make a $25 deposit.
- Invite family & friends
Everyone you wish to invite can easily contribute to the savings plan. Simply click the share icon and choose from contacts.
Parents aren’t the only ones who can start a CollegeBacker account – Anyone can set up an account to help with the child’s college education
What is a 529 Plan?
529 Plans are tax-advantaged investment plans. What is enticing about these plans is that withdrawals for qualified education expenses remain free of federal income tax, among other benefits, terms, and conditions. Those expenses include K-12 schooling and college costs such as tuition, books, housing and dorm room expenses, and other school supplies.
What is Collegebacker?
Collegebacker is an investment advising company operated by Principly, Inc., regulated by the SEC – the Security Exchange Commission – an independent Federal agency whose job is to monitor securities companies, self-regulatory organizations, and the stock markets in order to protect investors.
The company was founded in 2015 by Jordan Lee with the purpose to make it simple and easy for family and friends to invest in a 529 Plan and help pay for a child’s college education.
Missing Financial Opportunities
A recent study by financial services firm Edward Jones found “the number of Americans who do not recognize a 529 plan as an education savings tool has risen to 67% – a 5 percentage point increase from 2012, the year the survey was first commissioned. Of those who correctly identified a 529 plan as an education savings vehicle, almost half (48%) were unaware it can be used to pay for qualified K-12 tuition expenses; 50% of parents with children in the household younger than 18 said the same”.
Simply put, families aren’t saving enough for college. The reasons? Lack of awareness. People still don’t recognize the benefits of a 529 Plan.
It makes sense that if you don’t understand something, especially when it comes to money, why invest in it. However, Collegebacker claims to make it easy for anyone to start a 529 Plan savings account in a way that is not only user friendly, but also help anyone contribute to the account by setting up a gifting page. The twist is that there’s no need to get personal information about the kids or to fill out an additional application in order to make contributions. Its easy to make a gift contribution.
Typically, signing up with a 529 Plan savings account requires writing a check or in some cases linking a bank account. Collegebacker allows users to also use credit or debit cards as well as bank transfers to make an initial deposit or a gift contribution. Although there is a 3% processing fee on credit card transactions to over costs of the processor, there’s no charge for ACH (bank) payments or transfers.
Gift contributions are a great alternative for grandparents to contribute to their grandchild’s education without affecting the child’s financial aid, as it is better to make a gift contribution to Collegebacker rather than setting up their own 529 Plan on behalf of the grandchild.
This surprised me:
The Wall Street Journal wrote an article about saving for college that explains how a grandparent’s 529 Plan savings account affects a financial aid package, giving this example:
“$10,000 in a student- or parent-owned 529 plan will reduce eligibility for need-based aid by as much as $564, while $10,000 in a grandparent-owned 529 plan will reduce aid eligibility by as much as $5,000.”The Wall Street Journal, Journal Reports: Funds & ETFS “How a Grandparent’s “529” Account Affects Financial Aid.
Discouraging. You’re trying to help the kid and instead it may work against them. This is why its best to consult with an advisor. Collegebacker cites that clients are advised on a non-discretionary basis.
Just about every State, as well as investment firms, offer a 529 plan savings and other savings alternatives.
If you have a 529 plan already, connect it to CollegeBacker and start saving more.
Wondering how much to invest? Checkout Collegebacker calculator on their homepage. Plug-in some numbers to get an idea of what your savings will be.
Collegebacker has a simple, robo-advisor approach which simplifies the sign up process to make it easy for users.
“We ask a couple of questions and then recommend an age based investment fund based on their risk preference”.CollegeBacker
If you’re not ready to start a 529 plan, you can select a Backer Safe, a CollegeBacker savings account. Then when you’re ready, CollegeBacker will assist with investment choices and help you with any required documentation to turn it into a 529 plan. Collegebacker currently advises on approximately $2.25 million in client assets*
Your community can help
To invite friends and family to contribute to your kiddo’s college savings, CollegeBacker provides a customizable landing page for each child you sign up. There is no limit on the number of people that can contribute into an account. The whole community can help, and even relatives from out of state.
“Families are saving 43% more on average because of the ease of gifting. This is a feature of our service that is especially important to cash-strapped millennial families, many of whom have college debt of their own”Collegebacker
You know how people say “what goes up must come down”. Well, when it comes to paying for a college education you can pretty much expect for the cost to continue going up and never come down. Some people start saving as soon as they get the news of a baby on the way, and some people start much later. However, as I found out, Collegebacker makes it easier to save for college. Its never too early or too late to start saving for the road to college. In fact, you can start a 529 plan for someone who is in college already.
Hope this helps make it easier to start saving for college.
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*(as of the date of the Brochure on Collegebacker website)Some graphics made with Canva.
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