Tank #6: Save for College
If you have financial fuel left over after putting 20% towards retirement, save for your children’s college. The key word in the previous sentence is after.
Okay, you get it. You’re saving for retirement and have more money for college. Impressive. Take these steps to make figure out how much to save for your children’s college:
1: Figure out how much you will need.
College tuition is rising at around 6% per year. You’ll need a lot to pay for it.
2: Understand all the different ways to pay for college.
This should be a combination of your money, loans, and your kid’s money. It’s a team effort. Take a look here for more.
3: Decide which type(s) of account(s) to use.
Use Coverdell and 529s to take advantage of the tax benefits. This is a good resource to learn all about 529 accounts.
4: Select your investments.
Investments should go from aggressive to more conservative as kids get closer to attending college.