“Should I open a 529?”
I get some version of this question pretty regularly.
And yes, we can talk about the 529.
But that's usually not where I start.
I want to know what we're actually trying to fund.
What does college actually cost?
Before we decide how much to save, I want a reasonable benchmark.
Not necessarily the national average.
If you have a school in mind, let's look at that school.
Maybe it's your alma mater. Maybe it's Stanford. Maybe it's a UC. Maybe you have no idea where your child will go yet.
That's fine.
A lot of schools publish surprisingly detailed estimates now. Tuition. Room and board. Meals. Books. Transportation. Personal expenses. Sometimes they get very specific.
We can start there.
But even that number doesn't get to make the decision for you.
This reminds me of how I think about emergency funds.
There are rules of thumb. There is also the amount of cash that allows you to sleep at night.
College planning isn't that different.
Maybe the projected cost is $300,000.
Okay.
Do you want to fund all $300,000?
Half?
Do you want your child to have some responsibility for it?
Would you consider student loans for part of it?
There isn't one correct answer.
First, we need to understand yours.
Then we figure out where the money comes from
Let's say you want to pay for all of it.
Great.
Now we have another set of decisions.
Maybe your cash flow is strong enough that you can simply increase monthly 529 contributions.
Maybe you want to fund more of it upfront.
Maybe you want some of the money in a 529 and some in a regular brokerage account because you value the flexibility.
Maybe there are other accounts worth considering.
And maybe the money is already sitting somewhere else.
That's where this gets particularly interesting for Googlers.
What if the college money is already in your Google stock?
Imagine you run the numbers and discover you're $100,000 short of where you'd like to be for college.
At the same time, you have $1 million of Google stock.
Now the question changes.
You don't necessarily have a college funding problem.
You have a decision to make about your Google stock.
Could we gradually use part of that position to fill the college gap?
Maybe.
That doesn't mean:
Google stock is concentrated, therefore sell it.
That's too easy.
I want to know what the tradeoff is.
If you keep the Google stock, you retain the potential upside.
You also retain the risk that the stock could be worth less when tuition is due.
If you sell some of it, you give up that potential upside.
But now some of the money you've accumulated through Google has a specific job: helping pay for your child's education.
Neither answer is automatically right.
The question is what matters more to you.
And then there are decisions inside that decision
Suppose you decide you do want to use some Google stock.
We're still not done.
Which shares do we sell?
What is the cost basis?
How much of the sale would be a long-term capital gain?
What other income do we expect this year?
Are there losses elsewhere in the portfolio?
Does it make sense to do this in one year or spread it across several?
What does your tax projection look like?
Should your CPA be involved?
These aren't separate conversations.
The college decision affects the investment decision.
The investment decision affects the tax decision.
The tax decision may affect the timing.
They're connected decisions.
That's the part I think gets lost when we start with the product.
What if you don't want to sell Google?
Then don't.
Seriously.
If we've gone through the analysis and you tell me:
“Don, I understand the concentration risk. I understand that Google could be worth less five years from now. I understand the tax implications. I still want to hold my Google stock and fund college from future earnings.”
Okay.
That's a decision.
My job isn't to keep arguing until you arrive at the answer I would choose.
My job is to make sure you understand the decision you're making, what you're prioritizing and what you're trading off.
If you're comfortable with it and the numbers support it, we can close the books on that question and move on.
Sometimes the answer really is just: fund the 529
There's another version of this conversation.
You tell me:
“Don, we want to pay for college. We don't want our kids taking loans. We have plenty of cash flow, and we want to put $5,000 a month into the 529.”
We've run the numbers.
It doesn't interfere with the emergency fund.
It doesn't compromise something else that matters more.
You understand the alternatives.
Then great.
Fund the 529.
Financial planning doesn't require turning every decision into a philosophical exercise.
Sometimes discernment leads to a pretty straightforward answer.
Then we implement it. That's the work.
A Googler asks me a money question:
Should I open a 529?
And I help them see the decisions within that question.
That's the work.
What are we actually trying to accomplish?
How much do you want to fund?
How much is enough?
Where should the money come from?
What else does that money need to do?
What are you trading off?
What does the tax picture look like?
And once we've worked through those questions, what decision are you comfortable owning?
A 529 can be a very useful tool.
But the 529 isn't the college plan.
Your financial life is the plan.
The account is one piece of it.
And sometimes the college money is already there.
It just isn't in the 529 yet.
Keep Thinking It Through
College planning rarely sits by itself.
It can lead pretty quickly to questions about Google stock, taxes, cash flow, retirement and what else you want your money to make possible.
I've written about a lot of those decisions too.
Keep exploring the Insights →
Or, if you'd rather sit down and work through the decisions in your own financial life:
Book an intro call →
This content is for educational and informational purposes only and should not be considered personalized investment, tax, or legal advice. Each situation is unique and should be evaluated individually.