Baby Step 5: College Funding for Your Children
If you have a child, go open a 529. This is the absolute best thing you can do for your child. It is a college-savings plan that has a great interest rate and is tax-free. Do it now! Go!
My grandparents opened 529s for us grandchildren right when they first came out. I was able to earn quite a bit of scholarship money and by finishing my degree in three years, I left UofL with quite a bit still left in my account. When we found out Annabeth was coming, we started adding to it again.
The night of my high school graduation.
18 and ready to see/take on the world!
When friends and family ask what Annabeth would like for her birthday or Christmas we happily reply "College money!" A few times a year we add money to her 529. While the cost of college is steadily rising, we know that every penny saved is one less penny that she will have to earn through scholarships or grants.
Mark graduated college with a great deal of loans and while we grew and learned a lot from paying them off, we would really like for Annabeth not to have that experience.
Money added to a 529 can only be used for post-secondary education and related costs (housing, textbooks, fees, etc) so we also made sure to open a seperate savings account. We add money to that account each month with the hopes of buying her first car or helping her make a down payment on her first house. We use extra money that I make from garage sales and consignment sales along with a designated portion of each of Mark's paychecks.
We set a certain goal for ourselves of what we wanted to have saved by her high school graduation. We tried to make it an amount that we really feel will help her without bankrupting us in the present. Also, we obviously, have an advantage over parents of multiple children in that we have just one college education to save for. One of the many joys of raising an Only.
See you tomorrow for Baby Step 6!
**This is my own advice, not Dave's. I am not a financial planner, I just believe this to truly be the best deal going!