Moms Talk Network

When it comes to your children, it’s never too early to set aside money for college. College tuition costs increase every year. In order to make sure that your have enough money when the time comes, set up a plan that will grow with your child.

Before setting up any plan, do your homework. Begin with determining your need. You can look at the average increase in college costs over the last five years. This will give you an idea of how much money you will need per child based on how many years they have until college age.

Calculate the resources that are available to you to handle this cost. If you have more than one child, the cost of college may be out of your range when it comes time for them to attend. With this information you are ready to investigate college savings plans for your child.

The most popular savings plan for college is the 529 plan. Typically, a 529 plan allows parents and relatives to put money into a fund for a child to use when they come of college age. Plans vary by individual state and some have limits as to how much can be contributed per year.

There is no limit on the number of 529 plans you can have. Some also offer rollover when a balance remains once a child has completed their education. The money can be used for another child so that the investment is not lost.

The contributions made to a 529 plan are tax free. Those with a 529 plan can still be considered for government financial aid. And, annual fees for management of the account are less than one percent.

Start now. No matter how old your child is, a 529 plan is a good investment. Instead of gifts from grandparents or other relatives, they can give a contribution to the child’s college savings plan.

The amount of your giving to the plan depends on how much time there is until your child reaches college age. The shorter the time, the more you may want to invest. The allocation of funds can be based on age as well. When the child is younger, choosing more aggressive stocks gives a quicker return on the investment. As the age of need approaches, changing to more stable, long-term stocks will ensure that precious funds are not lost in the event of a stock market shake up.

Planning for your child’s future is prudent. No matter what their educational goals, they will have the money to pursue them. Opening a 529 plan alleviates the worry of how to pay for college.

Grab your Guide to Family Budgeting – Step-by-step guide to help you establish a workable budget.