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The truth is that it's never too early to start saving for your children's education. It doesn’t matter how young your child is, it’s beneficial to add the cost of college into your monthly budget. Along the way, you can explain the importance of saving to your children by showing them how their money is growing. An education is an investment, and planning for that investment can be an excellent learning experience for your child.
You can start saving in a number of ways, from money markets to bonds. But one of the most important parts of saving is creating a plan.
College 101SM Financial Services - Savings Comparison Chart
A savings plan is an important part of any financial strategy and Wachovia offers savings and money market accounts to help you build a solid financial future. A savings account is a safe place to keep your money and earn interest. It's having money in the bank, literally, that is easily available.
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529 plans provide tax-deferred earnings towards qualified education expenses like tuition, room, and board. These plans also allow gift-tax exclusions under certain circumstances and can offer special advantages for estate planning purposes. These plans offer flexibility in terms of both choice of college and investing options.
CollegeSense® 529 Higher Education Savings Plan
The Coverdell Education Savings Account (formerly the Education IRA) is a popular way to save for a child's education. Plus, any family member can contribute—so if a grandparent wants to put a little extra in at birthday time, it's easy to do. Other benefits include contributing up to $2000 a year, per child, tax free/penalty free earnings as long as the account is used for education before age 30. You'll have your choice from a variety of stocks, bonds, and mutual funds.
Coverdell Education Savings Account
If you're concerned that your savings won't be enough when it's time for your child to go to college, there's a way to beat the rising costs. Some states allow parents to pay today's tuition rates for future years in college, providing the assurance that the child will have the money he or she needs. The program also allows parents to defer paying federal income tax on earnings until the money is withdrawn. Be sure to find out if the plan is transferable, what happens if child attends an out-of-state college, as well as what is and isn't covered by the plan.
Article: Consider Prepaid Tuition Plans for College Savings
If you're unsure about which college savings program is right for you, consult a Wachovia Securities Financial Advisor. Working with an advisor can help you assess what type of savings options to explore: stocks, bonds, mutual funds, and more. If money is tight, your advisor might suggest setting up a Systematic Investment Plan (SIP) so that money is drawn monthly from your account into a money market account earning higher interest rates. SIPs can be set for as little as $50 a month, so almost anyone on any budget can start to save today.
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You thought we were kidding about the piggy bank? Saving for college is a perfect opportunity to teach your children about how money grows. Let them invest in companies that they love, like Toys R UsTM and Ben & Jerry'sTM. Create colorful graphs and let them track their own earnings. Explore new ways to make saving fun and profitable.
Article: Teach Your Children the Value of Money
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