Congrats! Your child just graduated from kindergarten. So it’s time to think about college — and a college savings plan.
Beginning the conversation about college planning may seem premature unless you put it in the proper perspective.
Of course we want the best for our children and the prospect of a quality education from a world-class university is appealing, but at what price? According to the College Board, the average yearly tuition for 2009-2010 for a private college was $26,273 (up 4.4 percent in a year). That’s $105,000 for an undergrad degree!
What is the chance of your offspring landing a job paying $100K a year right out of college? One study showed the average starting salary for a 2010 graduate to be $48,351. There’s not much net income left after the student loan payment. Throw in mortgage or rent and a car payment, and the “starving student” becomes a “starving college grad.”
Long before your child heads for the ivy covered walls of higher education, it’s time for you to go back to school and learn the ABCs of college planning.
Here is my advice. Open an account that is earmarked for college savings. It can be a 529 College savings plan, a Coverdell education savings account (formerly called an educational IRA), a Roth IRA or a mutual fund. I will explain these options in a future column. Put these college savings accounts on “auto-pilot” and put aside a set amount each month.
Do your homework early. Even if your child is barely in middle school, start right away. Ben Kaplan, a nationally acclaimed expert's advice: Parent should encourage their middle-schoolers to participate in national award competitions. There are thousands of essay writing contests with prize money ranging from a few hundred to several thousands of dollars.
Don’t underestimate scholarships; there is something for everyone. Even if your child doesn’t turn out to be an Einstein, many merit scholarships look for “well-rounded” individuals, with unique talents, leadership skills, community service involvement and athletic skills.
Finally, as your children exit elementary school, think about enrolling them in the International Baccalaureate program (IB) to earn potentially free college credits.
As parents, we need to help our children learn to make better decisions by looking at the long-term impact of their choices. The bottom line is to not get caught off guard. Start planning now to help your child receive a quality education and graduate without the encumbrance of a heavy burden of college loan debt.
Choosing The Right Retirement Plan For Your Business
Business owners and homeowners generally have to settle for less if they want to sell their business or a home in a timely fashion. That’s why it’s a good idea to put your earnings to work by setting some aside into a retirement plan.
Loaning Money To Family And Friends
If your friend or relative doesn’t pay you back, you could potentially receive a tax deduction and write it off as a non-business bad debt. However, you must document the loan properly by showing the IRS that it was a loan, not a gift.
Should You Refinance Your Mortgage?
With the low rates available, it is very tempting to refinance your mortgage over and over again. You really should think about how many times you want to refinance your mortgage!
