One of the worst things in the world is getting the bill from your child's college, and if you make them be responsible for part of their education it becomes one of the worst things ever for them (of course that feeling in a teenager only lasts for about 30 minutes then they are on to more important thoughts like "what time is Real Housewives on?").
Of course planning for your child's college is painful too ... when they are one year old you are thinking, "how can I make their life better than the one I have?" In today's world, an education is so important that we all jump right to that thought ... paying for school.
First ... let me tell you there is no wrong way to plan for their college fund! Unless you don't plan ... which is the same as planning to fail! I know it's crazy confusing but maybe this 2 minute blog will help you out.
If you get paid every 2 weeks and you put just $25 per pay period in to an annuity for 18 years at just 1% growth ... you'll have $12,000 to give your child for their college. 25 bucks is less than the cost of taking a family to McDonald's for lunch one time, it's about $2 a day for every work day or 2 Pepsi's. So even a little grows a lot when you've got a long period of time to work with.
The 529 College savings plan will give you some tax benefits and allows anyone to donate to your child's education but it comes with a lot of strings, not the least of which is they have to use it for college (so what if the join the Army and start a family). You might start one just so the grandparents can put money in when they feel like it, but save on your own to get more control.
What do I recommend? Well, I glad you asked ... I say that if you are serious about your child's education you need to plan for the worst case scenario ... what if you die in a car crash a year after you start saving? How will your spouse put money in the fund? What if you save all that time and your child gets a full ride or joins the Army? How will you get your money without a penalty?
Here is my simple generic advice when looking to save for the children's college ...1) start saving at least a little each month in the bank or a money market account. 2) take out a life insurance policy to protect the college fund from you dieing too soon. This can be a term policy which is cheap or a cash value policy that will grow in value which ever you are comfortable with. 3) open a 529 savings plan and let all your relatives and friends know that they can put money in it for your kid (doesn't hurt to ask).
You need to speak to a financial professional that you trust (financial adviser or insurance agent) to see the best way to go and to measure your personal risk tolerance. Be sure you trust them ... then start saving ... even a little will be more than nothing.
Ask me about protecting your child's future! Click here!
Nice post
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