How to Start a College Fund for your Kids
What to do with your Stimulus Check? Start a college fund for your kids!
Quick and Dirty on Saving for your kid’s College expenses…….
My mother-in-law, Ginny, grew up in a family that really valued education. Her grandfather was a school principal and started a college fund for her when she was little. That fund continued to be fed and grew through the stock market and later my husband pay for college. When our first son was born Ginny was on it, starting a College fund immediately. The crazy thing with the stock market is your money doubles every seven years. It doesn’t take much to build a nest egg if you have time and put money in early. And if we are on it as parents (or grandparents) we have over two doubling cycles before our kids get to college from birth.
A college fund is called a 529. It is awesome as far as taxes go because even though contributions are not tax-deductible, the earnings on them are and you will not be taxed when the money is taken out to pay for college. So the money earns money tax free.
How to set up an account: Google 529 plans. Most states have them, but not all are efficient ways to invest. We use my529.org which used to be the Utah Educational Savings Plan; it consistently ranks as having low expenses and good investment choices (Vanguard Funds). Go to the website (my529.org) and they have complete information and forms for setting up the account. The student must have a social security number. Accounts have an owner (usually parent or grandparent so this money is not taken into account when looking at college scholarships, etc), beneficiary (student) and possibly primary and secondary successors (who will take over for owner if owner dies or can’t manage account). Who should own the account has gotten complicated, so read below article by Amy Feldman. You will have to select a way to invest, which depends on what risk level the manager (you as parent likely) is comfortable with and how long till the fund is needed for education.
Go for it!!!! And ask for help if available. College fund presents are way better than plastic for Birthdays and holidays!
More info Here: Don't let that 529 college plan hurt your financial aid