SMART WAYS TO SPEND $1,000

Got a little extra cash sitting in your bank account? Consider some timely ideas for putting it to good use. On our list: financial gifts for family, contributions to charity, sprucing up your home and buying a new bike. Got even more cash on hand? We also have suggestions for ways to spend up to $10,000.

GIVE TO FAMILY

FUND A 529 COLLEGE SAVINGS ACCOUNT Over the course of a few years, the cost of higher education typically tops six figures. Funding a 529 college-savings account is a smart strategy to set aside money for your child’s future college expenses. Your contributions grow tax-free, and withdrawals are not taxed if you use them for qualified college expenses, including tuition, room and board, books, and computers. In most states, you can also take out up to $10,000 a year tax-free to pay school tuition for kindergarten through 12th grade. If you withdraw from a 529 for nonqualified expenses, you’ll owe income tax and a 10% penalty on investment earnings (but not contributions).

Nearly all states sponsor at least one 529 plan. If your state offers a tax deduction or credit to residents who invest in its plan, using your state’s 529 may be the best bet. If your state has no tax break or provides a break no matter which state’s plan you pick, explore your options from other states, too. You may find a plan with lower fees or more desirable investment choices. Usually, direct-sold plans come with lower fees than those from brokers. At www.savingforcollege.com, you can find information about your state’s plans, compare plans side by side and see listings of the site’s top-rated 529s from around the country.

HELP PAY STUDENT LOANS