Plan For Your Child's Education
When you have a child, it is natural to want the best for them. And that should include them not graduating in debt with student loans for their college expenses. Without proper planning, even the best student can end up shouldering some heft student loan debt upon graduating college.
College Savings Planning Guide
Like retirement, college expenses should be saved for in advance. This is true even if you expect your children to attend a public university. In fact, a recent Washington Post article notes that the tuition for public universities and colleges is rising at a rate faster than that of private colleges and universities. This rise is worst in the West where it is rising at 6 times that of other regions.
The New York Times notes that the average cost of a private college education is currently around $23,000 a year. So, with the cost of a college education becoming more unaffordable for the average American family, it is a good idea to start saving for the expense as early as possible.
If you are starting a college savings portfolio, then your best bet for this is a portfolio heavy on stocks. Then, as the kid gets closer to college age you just covert those stocks to bonds and cash. Or, you can opt to invest the money in mutual funds so that you can let someone else manage the money.
Saving for college expenses will prove to be a little easier than saving for your own retirement as you do not need to save up as much money. In fact, there is a good chance that grants and scholarships can cover part of the college costs, which means that you do not even need to save up the full amount of the cost to attend.
For tax breaks on the education savings, consider a 529 plan. You can start one of these plans at any time as there is no age restriction or income restriction.