How to Prepare for Your Children’s College Tuition with Financial Planning Services in Des Moines, IA

Sending a child to college is an expensive undertaking, and no matter how much you save, it always seems like it is never enough. You may not be able to put away enough money for your child’s entire college experience, but every little bit helps, and financial planning services in Des Moines, IA can help you get started on the right foot.

Start preparing right away

The best way to deal with the many expenses that come along with a college education is to start saving as soon as you can. Putting away as much money as possible as often as your family budget will allow might seem like a slow way to save up enough money. But if you start when your child is young, you’d be surprised at how much you can save, and how much of a difference it will make by the time your child is ready to enroll.

When your child is old enough, encourage them to get a part-time job doing something they enjoy. If they contribute a little bit of each check to their fund, not only will they be adding to the amount of overall savings, but they will also be learning important lessons about how to manage and save money, which will be invaluable during their time on campus. Once you begin to accumulate money, the next step is creating an account to keep it in.

College savings plan options

While there are many ways to go about saving for college, including stashing funds in a traditional savings account, there are other options that may prove more beneficial. Here are two of them:

  • 529 College Plans: Also known as Qualified Tuition Programs (QTP), this saving plan allows you to invest your money after taxes have been taken out into an account that can be accessed when your child is ready to attend college. The best feature of this type of program is that, as long as the money withdrawn goes directly to college expenses such as tuition, books and room and board, the money can be taken out without any tax penalties. When the time comes, if your child decides that college may not be for them, the funds can still be withdrawn or the money can be transferred to a different beneficiary. Though a penalty may apply, you will ultimately be able to recover the majority of your savings.
  • Roth IRA: Similar to a QTP, a Roth IRA presents the option to invest post-tax monies into an account that can be accessed after five years. As long as the money is withdrawn to pay for college and education-related expenses, the transactions will remain tax and penalty free. If your child decides not to go to college, you can use the money in a Roth IRA for your own retirement, or alternatively for a down payment on a house, without penalty. This flexibility minimizes risk, making Roth IRAs another very attractive option.

College planning is all about preparedness, creating a plan that works for your family and then executing the strategies of the plan to save as much money as you can. To learn about other college savings options, contact the team at Accounting & Tax Professionals, PLC. Our financial planning services in Des Moines, IA can help find options that match your family’s needs best, so be sure to give us a call today.

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