Saving for College

Somedaysoon

So I realize my little guy is only 2 months old...but it's hard not to look at his sweet face and already worry about his future! This may come off as a dumb question, but I was blessed to have a family that was able to pay for my college education and I want to hopefully be able to do the same, or come somewhat close for Miles. Being a single Mom, there's not a lot of extra income coming in, but we live comfortably, and I guess my big question is if opening a savings account specifically for college is the way to go, or if there are other options that would allow me to put away small amounts at a time? Any advice or input as to what you and your families are doing would be greatly appreciated!

Zen

I don't have a plan yet. Well ... I have a plan for a plan, but it's still in the planning stages!

friendamy

I have a regular savings account that I deposit money into every pay day (it's automatic)... then, when it gets to $500+ I roll it into a CD account. I think that's what it's called my dads a finance guy and he pretty much takes care of that. but I know at 5years old he's got more than I do!

mommylove

I am with emn'sar, a 529 plan is the way to go for college savings. Read up on it and you'll see quickly how it is the best way.

friendamy

one reason I chose not to do the 529 was because that money has to be used for college - if you withdraw it for anything else, you can be fined 10% and you'll owe federal and state taxes at the current rate. so if you put 50k in there and only use 40k for school, that 10k will be taxed and fined

if my son earns a scholarship, or whatever, I want him to be able to use that money for whatever he wants. so many things can happen, the thought of that much money being so strictly allocated kinda freaks me out. but I know many families that have 529 accts - it's definitely a personal choice.

roses25

I am not currently saving for Aiden's college. He has a few savings bonds that his grandpa has gotten him for his birthdays and Christmas. However, I haven't set up a savings yet for him. I plan to save for college for him. Somebody gave me the tip that as long as you start saving for a child by kindergarten that you should have plenty by the time they are ready for college. Therefore, I have chosen to pay off my debt currently such as my car loan and fertility costs in addition to having just a general savings account that I put atleast 10% of my paycheck into each month.

Carolyn

roses25

I am not currently saving for Aiden's college. He has a few savings bonds that his grandpa has gotten him for his birthdays and Christmas. However, I haven't set up a savings yet for him. I plan to save for college for him. Somebody gave me the tip that as long as you start saving for a child by kindergarten that you should have plenty by the time they are ready for college. Therefore, I have chosen to pay off my debt currently such as my car loan and fertility costs in addition to having just a general savings account that I put atleast 10% of my paycheck into each month.

Carolyn

emn'sar

i strongly recommend looking into a 529 plan. read everything you can about it. it's the way to go!!!

EMG_REL

H's grandparents have opened a savings account for him and contribute to it often. We have a smaller one that we contribute to minimally ($50/month right now). The same probably won't be said for our second child; there seems to be an assumption that my biological child should be financially cared for by my biological mother, who doesn't have nearly as much money as H's biological grandparents do and who didn't even help ME pay for college. That's a whole other story, I suppose...

Shaeley Mae

I'm with Jdiana ..... retirement comes first. I contribute to a 401K and a Roth IRA every month.
Once I'm done paying $1400/mo for childcare, I expect I will be dumping a good portion of that into some type of savings account for the kids, but probably something that is interest bearing (as opposed to tax saving/deferred).

cocobay

Ali and her father opened a savings account for Bronx when he was 2 weeks old. We contribute, grand parents contribut, and any little amount of money someone gives him goes in there. We plan to use it for college, but if he gets a scholarship he will get it around 20 years old. Ali's dad also has a trust account set up for him so that may be used for college as well. Never to early to plan for that.

ttc.jujubee

Great question! Given inflation, the estimates are that it will cost about $40-50k a year for school (tuition only) by the time our 7 month old son is of college age. We have a 529 plan. Not only is it tax deferred, but we have it very aggressively invested, so the returns are very good in the long run (9-12%). Well, when the market performs. Right now it's crap. (1-2%)

It doesn't concern us about the 10% penalty and having to pay taxes on it if we withdraw it for something else. Since it can be used for not only tuition, but books and housing as well. And for any type of school (community college, trade school, etc.)

We put a little money in each month on an auto deduction. All monetary gifts for the boy go in there as well.

Good luck on finding the best option for your family!

Kari

I have a 529 for each of the kids, but mainly because our state has a grant that they will put $500 into the account if we just open it. So I did, and I put in $250 for each child. But, I'm not contributing to it right now because my dad made a good point that when the time comes to apply for financial aid, and an amount is set that my children qualify for, any money saved into that 529 will count against it. So say college is 40K a year, and my kids qualify for $20K in grants and they have 10K in their 529, they only get 10K from the grant.

My plan is to work at a college both my kids go to so they can go tuition-free. Hopefully it'll be something local so they can commute and live at home!