 | Chris Senecaut is a Financial Representative for Modern Woodmen Fraternal Financial. As a company they will be lowering their rates effective December 27, 2011. All transfers must be made by that date to get their 3% guarantee and we will still have their guaranteed return of principal. Chris looks forward to helping you get through this economic downturn and prosper in the future. If you would like to learn more please call 620-724-0833. |
Banking & Finance
2011-09-29 15:52:58
Saving for college
Q: I have a couple of kids, and do not make much money. I want to start saving for college for them though, figuring every bit counts. Any tips on saving for college and making the most of the money?
A: First, it is never too late to start saving, because every bit does count. Just ask any ramen noodle eating college student. However, the sooner you start saving, the better.
One of the most important things to remember is that time is a tool. No matter where you are starting in the saving process, you will need to make some serious decisions based on time. For example, some people choose to dip into their retirement account to pay for their children’s college tuition. On the surface, it seems like a wise decision. However, when you think of time as a tool, you see that the financial opportunities offered to your child in their college years far exceed the opportunities that will be offered to you in your retirement years. Depleting your retirement savings may eventually add a burden to your child.
According to the College Board, the average cost for tuition and fees at four-year public institutions has increased nearly 51% over the last 10-years (after adjusting for inflation). You can expect these costs to continue to rise.
Saving just .50 a day can result in $6,500 in 18-years in a plan that gives 7% annual return. Saving $100 a month can result in $43,300 in the same amount of time.
Next, you need to investigate your options in college savings plans. You may want to talk to a financial advisor or someone knowledgeable about savings plans to help you understand and leverage the tax benefits. A number of college savings plans offer additional advantages, beyond a traditional savings account. The 529 plan, for example is set up specifically to reap optimum advantage for college savings.
Finally, examine fees and expenses for plans in and out of your home state. Every option will involve some type of fee-table and individual state taxes will vary.
No matter when you start saving, every bit will help reduce reliance on debt.
