With summer rapidly coming to a close, all of us parents find ourselves scrambling to the local mega store to snag essential back-to-school items. We’re in search of the best deals on backpacks and lunch bags, and on a wild-goose chase for the exact kind of red folder listed on our kid’s supply list.
Amidst the whirlwind of sending our young ones off to elementary, middle, or high school, it’s easy to lose sight of the fact that this period of time will soon come to pass. Before we know it, our eager little learners will move on to bigger, better, and more expensive things - college. With the skyrocketing costs of college now, there is no telling what it will cost when your young one is ready to attend.
Here are some tips on how to start saving now for your loved one’s future college education.
Start a College Savings Plan
There are many types of college savings plans available, including:
- 529 College Savings Plan: Many states offer the 529 savings plan as a way to invest after-tax money into your child’s college fund. Funds may be withdrawn and used towards your child’s tuition and book expenses.
- Roth IRA: Typically used for retirement savings, Roth IRA funds can also be withdrawn for education and other purposes.
- Prepaid College Tuition: A handful of states offer this program where parents are able to make investments towards their child’s education ahead of time, locking in current tuition rates.
- Coverdell Education Savings Account: This plan is similar to a 529, but can be used to cover any education costs for K-12, as well as college.
With all of these plans, various restrictions apply. A certified financial planner (CFP) will help you do adequate research and pick the plan that works best for your family. Our CFPs in Palm Beach Gardens want to help you make your money work for you.
Cash Back Credit Cards and
With cash-back credit cards, you can earn a designated percentage back on certain amounts spent. That percentage can be designated straight to your child’s college savings plan. Similarly, A
In lieu of birthday or Christmas gifts, family members and friends can make donations to your child’s education through programs such as LEAF College Savings and giftofcollege.com. These programs work in slightly different ways, so be sure to enroll in the one that’s best for your situation.
Traditional Savings Account
Think of how much money can accumulate if you commit to putting aside $50 a month towards your child’s education. From birth to age 18, close to $11,000 could build. With a decent percentage on
Speak With a CFP in Palm Beach Gardens Knowledgeable in College Education Savings
No parent wants their child to bear the overwhelming burden of paying for education. Teach your child
Overwhelmed at the thought of how you will pay for your child’s college education? Let our wealth management specialists in Palm Beach Gardens help you manage your debts and savings wisely. You should focus on watching your children grow in the present, instead of the stressing about the future.
Disclosures: Investments are subject to market risks including the potential loss of principal invested. At this time, the tax law allows participants in 529 plans to make tax-free withdrawals of account earnings to pay for qualified educational expenses until December 31, 2010. After 2010, distributions may be taxed at the beneficiary’s tax rate unless there is further legislation to extend or change the tax law. Any discussions of withdrawals must be balanced by indicating that withdrawals for non-qualified educational expenses are subject to a 10% IRS tax penalty and are taxed as ordinary income. Any discussions of tax-free withdrawals must indicate that the withdrawal must be used for qualified educational expenses and that such withdrawal may be subject to income taxes, depending upon the participant’s state of residence. Units of the 529 plan investment options are municipal securities and may be subject to market value fluctuation. Before investing in a state specific 529 plan, you should compare your own state's qualified tuition program and any state tax or other advantages it may provide.