FIRST, for some background seasonal music click on Ding Dong, a song with possibly the best carol collaboration of beautiful voices ever. My favorite!
So you have a gifted child and you wish the best for him or her. They are strides ahead of other toddlers their same age! How can you send your child to the best schools as cheaply as possible?
Play the lottery!
I am kidding of course. But there is one way to send your kids to college as close to free as could be.
What if you invest money for their education? This money is earmarked for tuition, books, room and board, even computer programs. Then what if every year, all the money you spent investing for their education you got back? Every dime of it! AND, if those contributions grew while it was invested (hopefully) you can use that growth tax free as well? Wouldn’t that be like going to college for free?
That is what state sponsored college saving 529 plans do. You can make regular contributions to the plan and then get the total amount of your yearly contributions off your state taxes at the end of the year. Earnings grow tax free as well.
Each state has a different 529 plan so you will have to look into the plan administered by your state. Here is a place to start to find the plan in your state. Want to know more about the details and benefits of college saving 529 plans look here.
There are several types of custodial accounts for minors. Bank custodial accounts and UGMA’s are a few others. Each has their own set of rules as to who controls the money and what it can be used for. But if you want to invest money specifically for an education (and it can be spent on private schools before college as well), state sponsored 529 plans are the best way to go.
Have two Baby Einsteins? (you both were geniuses, right?) The money that is not used by one child in one 529 account can be transferred to another child for educational purposes as well. Like I said each plan is different so do some research and get started. If you have any questions please ask!
Next week I will make suggestions on the best way to invest that money in the 529 plans.