When you’re pushing your 40s, you’re REALLY worried about finance.
In your 40s, you’re finally starting to see your kids growing up. Sure they were expensive as babies. But now they’re probably getting ready for college. And with the booming levels of student loan debt and tuition rates, there never seems to be enough money to pay for a quality education.
It’s tough to budget for a college fund. There are so many other expenses to worry about. You have your mortgage, the groceries, and car payments. And of course, the biggest expense of all- your kids.
You’re also socking away money in retirement plans, savings, and other investments. But you can’t forget about that college fund. It’s always better to think about the college fund sooner than later.
Here’s why you need to start saving for that college fund NOW. And not when you really need it.
Unexpected Expenses Will Always Come Up
Accidents happen. Emergencies spring out of nowhere. That’s a fact of life.
So make sure you always have a financial cushion. Although insurance policies cover a lot, you need to make sure you also have the cash reserves on hand for emergencies.
Consider setting aside money in a 529 Plan immediately, so you have your emergency fund separate from your college fund. A 529 Plan is one of the best vehicles for starting up a college fund for your kid. You can’t expect your cash in the bank to be used for college.
Visit this link for a bit more information: http://www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php
Tuition Rates Are Only Getting More Expensive
Going back around a decade or two, college cost no where near as much as it does today.
While a few students can get scholarships, in most cases, a student will need to borrow some money and take out loans just to attend college. In these times of increased competition, getting admission in the top renowned colleges, requires some planing.
Not only do you need to have your 529 Plans set up, but you should also educate your child about the expenses of college. They need to understand that this is a big investment, and can’t just blow off their classes.
Something I haven’t yet mentioned is that 529 Plans are also good for your taxes!
If you are responsibly setting aside money for a college fun, you are eligible for tax breaks. A 529 Plan actually offers tax breaks on both the federal AND the state level. That’s double the benefit!
It’s also extremely hassle free to report the growth of your 529′s. Unlike bank accounts and savings accounts that send you tax forms every year, the 529 doesn’t require ANY of those annual forms. The only time you’ll see a form from about your 529 is when you are finally making your withdrawals.
So you can be taking advantage of the benefits of a 529 while never seeing a tax form for over a decade! That makes a 529 one of the most tax friendly investment vehicles out there. No more headaches during tax season!