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Solopreneur Money

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Back to Basics #10 – Education, Ep #150 

We all want our kids to get a good education, but everyday college becomes more and more expensive. This is why it is so important to plan for their education needs in advance.

On this episode of Solopreneur Money, we’re going back to basics to help you create the life you want for yourself and your kids. Listen in to explore the various ways that you can set aside funds to use for your kids’ college education.

You will want to hear this episode if you are interested in…

  • Questions you should be thinking about with funding your kids’ education [3:42]
  • Which college savings tool you want to use [8:45]
  • The Coverdell education savings account [12:12]
  • How to start saving for college [17:51]

Questions to ask yourself before saving for college

My wife Melissa feels that one of the smartest things we did with our money was fund our girls’ college education. This act has taken the weight off our shoulders so that we are not scrambling to figure out how we’ll pay for three girls entering college in rapid succession.

Before you jump in and start putting aside money consider some questions first. How much education do you want to pay for? Everyone has different ideas: some people want to fund every bit, others want to pay a little, and some feel they shouldn’t pay at all. Whatever you decide will be the right decision for your family.

What will their education look like?

Next, think about your time horizon. How long do you have until your child enters college? One thing to remember is that you aren’t footing the bill for all four years as soon as they turn 18. The invoice is paid each semester so that allows for some flexibility and a few more years to save.

You’ll also want to consider the kind of education you plan to fund. Will you be paying for a trade school, a four-year college, a private university, or a public one? These choices have vastly different price tags. You should also keep in mind whether your child may be up for scholarship opportunities which would lessen your financial burden.

Ways to save for college

Now it’s time to consider savings vehicles. How will you fund your children’s education? By far, the most popular savings vehicle for education is the 529 plan. A 529 uses after-tax savings to invest. Qualified distributions can be withdrawn from the account tax-free. The money can be used to pay for an accredited 2-year college, a 4-year university, or a technical school. Another perk of the 529 is that you can transfer the beneficiaries. This is helpful if one of your kids ends up with a scholarship or chooses a less expensive degree program.

The 529 is not the only way to save for college. There are other creative ways that you can put your money to work. Listen in to hear what the other options are for college savings.

Resources & People Mentioned

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