I'm a financial planner, and I have a 529 plan for my child, but I intentionally don't max out my contributions

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• It's never too early to start thinking about saving for college, and a 529 plan can help with that.
• However, I only contribute a small amount to my daughter's plan each month.
• A 529 plan is great for saving on taxes, but its lack of flexibility makes it less valuable to me.

A college education comes with a hefty price tag, which means it's truly never too early for families to think about saving for this potential expense.

My own daughter turns 3 this fall. She's had a 529 plan since she was only a few weeks old. We do contribute some money to her plan, but there are other ways we're planning for her future — educational and otherwise — beyond that.

As a financial planner, here's how I think about college savings and what we do to plan in my own family.

529 plans are useful for a specific purpose

529 plans were created for a very specific purpose: as college savings vehicles that rewarded savers with tax advantages.

Your contributions can grow tax-free in a 529 plan. Distributions from the accounts are tax-free too, so long as the money goes to qualified education expenses. 

The SECURE Act 2.0 also lets 529 account holders do Roth IRA rollovers. This is a fantastic benefit that can give families the ability to diversify the taxability of accounts for a 529 plan beneficiary in the future. 

529 plans sound like a great deal, because they are! I recommend virtually all my financial planning clients open these plans for their children.

And yet, my wife and I only contribute about $400 a month to our daughter's 529 plan. This would leave us far short of our college funding goal … if it were the only way in which we were financially planning for her future.

The big drawback of college savings plans

The feature that makes 529 plans great also contains their main limitation: You get tax benefits only if you use the money for qualified education expenses. You may be subject to taxes and penalties if you take money from a 529 plan and spend it on anything else.

If flexibility and choice are top financial priorities, you need other tools in addition to a 529 plan at your disposal — tools that allow you to grow your wealth for any purpose, not just education goals.

Saving and investing for maximum flexibility

My wife and I do save and invest more money on our daughter's behalf. We just contribute most of what we can save into a joint taxable investment account in both of our names.

Based on our current overall savings rate, we could pay for college out of pocket by the time our daughter is due to start her freshman year without relying on her 529 plan.

Or we can pay for whatever other goal we need to fund based on what actually happens in our lives over the next 15 years. The only constant in life is change, so flexibility and choice are incredibly important to us.

By investing heavily into our investment account, we're laying the groundwork to support ourselves (down the road, in retirement) and our daughter (for whatever her individual goals may be 15 to 20 years from now), regardless of whether traditional college is in her future or not.

It's important to enjoy life today, too

We want to maximize our entire family's future financial flexibility, which means we prioritize contributions to our taxable investment account above all else — even though doing so means giving up some tax advantages along the way.

It's also really important for our family to enjoy life together today. Maintaining our savings rate target is our top priority; spending on experiences that we value in the present is second.

That means we will opt to spend $500 on the ballet class our daughter is obsessed with rather than put that $500 into her 529 plan. If there is extra available to put into a 529 plan after our other expenses, that's great, but it's icing on the cake rather than a requirement for us.

This is also the strategy I tend to recommend to our wealth management clients: Yes, open and fund a 529 plan and take advantage of all its benefits. (That includes giving other family members, like grandparents, a specific place to directly contribute to a child's education if that is important to them.)

But also save and invest aggressively into a taxable investment account so that you have the financial resources you will need in the future to fund whatever life may look like down the road — and don't miss out on very important experiences with your family today for the sake of putting just a little more into the college fund.