When planning your child’s college fund, the earlier you start setting money aside, the better off you’ll be. The ever changing costs of tuition can make it difficult to determine how much you’ll need to save for your child’s future. But with a good head start and solid savings plan, you can ensure that you child will have the necessary funding when the time comes.
Most states offer a 529 plan that allows families to set aside money for future education costs. These plans can be used to pay for qualifying college costs nationwide. Most of these plans are flexible and will not be affected by your choice of schools.
These plans differ from state to state so you will want to do some research before you decide to invest. The 529 plans could also offer some tax benefits if they meet certain criteria. You may want to consult with a tax professional before you commit yourself to a 529 plan.
There are two basic types of 529 plans. The saving plan works much like an IRA by investing your money into mutual funds or other investment opportunities. The Prepaid plans allow you to prepay some or all of the future education costs.