Are you a new parent with a new baby in your life? If so, congratulations. Obviously, you are well aware of the importance of having a new baby and the reality of the cost. We all want the best for the little ones in our lives so why not start early with a 529 plan to pay for college? Many families put off funding for college until the child is in high school and that makes paying for education much more challenging. Instead, you should start early; like at birth.
Investing a few hundred dollars a year for 18 years is a lot easier than waiting until your child is in high school to figure out how to pay for higher education. For example, if you start at birth with a $1,000 opening balance, contribute $100 per month for 18 years, and earn a conservative 5% return and you are in the 15% tax bracket, you should accumulate around $37,853 vs. $34,944 in a taxable savings account. Of course, a higher return, or periodically adding money from friends and family over the years will greatly add to the amount. If you get the grandparents on-board for another $100 per month, you could accumulate $73,300 vs. $67,773 in a taxable savings account. This is just one example.
Working with a Certified Financial Planner™ you can target specific school options and calculate the future anticipated tuition of a specific private school or state school and craft a plan to meet your funding goal. Keep in mind that your decision to fund a child’s education is up to you. As parents, you have the choice of funding 100% of the education or 50% of the education or asking your child to work and pay for part of their own education. Factoring in grants, scholarships, awards, and loans is also part of the equation. The key is to get help early on, have a plan and let time work to your advantage.
Let’s do this! As an independent Certified Financial Planner™, I can help you plan your child’s education tailored to your goal, timeline and resources. Contact me and let’s get started! #talktometuesday #education #Hireaplanner #529 #529plan #collegedream