Saving for college is rarely black and white or a clear straight path. Since the future is uncertain when we try to plan, and especially when we pretend we can be precise with planning, it can end in frustration.
College expenses are difficult to plan for.
- What will it actually cost?
- What about inflation risk?
- What kind of rate of return will I need?
- How much do we need to save?
- Where do you want your children to go; will they get accepted there?
Where do you start?
It’s hard to argue against using a 529 account for at least some portion of the money you’re saving for college. There are two options available: prepaid tuition and college saving plans. Such plans can offer tax benefits.
But remember that if you withdraw money from these accounts for something other than education, there may be penalties and fees.
No matter what path you select, one of the most important and valuable parts of the process might be the conversations you have with your children. Besides helping prepare them for college, you’re helping them learn how to set and achieve their financial goals. And that’s an education they can always use.
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