Before we know it our super hero or little ballerina will be going off to college. Even though we may not know what they will be when they grow up or how much the education to get them there will cost, it is important to start a savings plan as soon as we can.
There are many account options designed to help us save for educational expenses. Some people select regular savings accounts or certificates of deposit, while others use educational IRAs or 529 plans. A financial advisor can help us decide which account is best for us based upon our individual risk tolerance, return expectations, and time horizon.
College planning also creates the perfect opportunity for us to teach our kids about the importance of managing their finances. Allowing them to get involved in the planning process helps them learn firsthand the value of budgeting, prioritizing needs versus wants and savings. These skills will follow them into their adult years as they prepare to save for their first house, retirement, and even their own kid's college education.
- Do we plan on financially contributing to our child's education?
- Are there tax benefits for us selecting one account type over another?
- If we already have a college savings plan in place, are we happy with the growth?
- Are we periodically reviewing our plan with our financial advisor?