How to Start Saving for My Child’s College Fund?

Whether you have one kid or 6 kids, you want to be able to save some money for them to go to college. These days, a four-year university can be very expensive, so the earlier you start saving the better. So, how can you start saving? With a 529 Plan.

What is a 529 Savings Plan?

A 529 plan is an investment account that can be used to save for educational expenses like college tuition.

How you have your child’s 529 plan titled is as important as the money you put into it. Should you, the parent, be the owner? Or, should another relative be the owner? Depending on your situation, this could drastically affect your child’s ability to get grants later on.

Before setting up a 529 plan, please contact us to help you figure out what is the best way for you to title it.

What About a Roth IRA?

If you are a business owner, you can hire your child so that they are earning income that is put into a Roth IRA. Savings in a Roth IRA will not affect FAFSA’s aid.

On a 529 Savings Plan, there is a penalty for using 529 funds on non-college expenses. A Roth IRA allows you to use it for college, or retirement, or even a down payment on your first house.

Retirement Planning and College Planning

It is important to save your retirement plan and your children’s college fund separately, and it is most important to save for retirement unless you have an agreement with your children that you can move in with them later on in life. Basically, you can always help your kids pay off their college loans, but you can’t get a loan for retirement.

Learn More About How to Save for College

There is so much more that goes into starting a savings fund for college. If you have any questions or want to learn the best way to save for your children’s college education, contact Kevin Walker today!