Financial Planning: Saving Money for College
Before you start saving specifically for college, you should consider your overall financial situation. You might realize that you want to focus on other financial goals like buying a home, saving for retirement or paying off high-interest credit card bills.
If you decide that saving specifically for college is right for your family, then the next step is to determine whether investing in a 529 plan is your best college saving option. Investing in a 529 plan is only one of several ways to save for college. Other tax-advantaged ways to save for college include:
Coverdell education savings accounts
Uniform Gifts to Minors Act or UGMA accounts
Uniform Transfers to Minors Act or UTMA accounts
Tax-exempt municipal securities
Savings bonds
Saving for college in a taxable account is another option.
Each college saving option has advantages and disadvantages, and may have a different impact on your eligibility for financial aid, so you should evaluate each option carefully. If you need help determining which options work best for your circumstances, you should consult with your financial professional or tax advisor before you start saving.
Confused? Learn more about 529s at the U.S. Securities and Exchange Commission site and at savingforcollege.com.
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