If you’re a parent looking to plan for your child’s future education, the sooner you can start, the better. With rising tuition rates and plenty of other unpredictable costs, it’s hard to tell exactly how much you’re going to need, so it’s best to plan for the worst. Relying on student loans can often lead to financial troubles later in life, not only for you but for your child as well. It’s best to plan in advance for college expenses as a parent if this is important to you. If you have any questions, don’t hesitate to speak with a financial expert here at Anchor Wealth Management.
At Anchor Wealth Management, we like to choose plans that allow the client to maintain control of their investments and not put anything on auto-pilot. With that in mind, our team does not advise looking into 529 college plans that are age-based. But don’t let this advice steer you away from 529’s altogether.
At Anchor Wealth Management, we are constantly helping clients with 529’s. Not only do 529’s help pay for college or graduate school, but a 529 can also be used to pay for vocational or trade schools, elementary or secondary school tuition, room and board, books and supplies, as well as computers. It’s difficult to find another plan that offers more flexibility and/or possible tax breaks.
UTMA and UGMA Accounts
UTMA and UGMA accounts provide some tax benefits for people under 18. If your kid doesn’t want to go to college and there isn’t a risk of losing financial aid, these are a potential option. UTMA stands for Uniform Transfer to Minors Act and UGMA stands for Uniform Gift to Minors Act. According to the IRS, the first $1,000 is tax-free, while the second is taxed at the child’s income rate and the remainder at the parent’s income rate.
A Money Market Or Savings Account
Is your son or daughter within three years of going to college? If so, a money market account could be a good option. Not only does a money market account offer the potential for fixed growth, but you won’t have to worry about investing in a volatile stock or bond market. Another option to consider is a savings account, which helps you keep better track of what funds you have available and how much you’ll need. Should your child have more than three years before heading off to college, a 529 or UTMA is the ideal solution.
Contact Anchor Wealth Management
Higher education will be one of the most important aspects of your kid’s life. However, with rising tuition rates it can become increasingly difficult to find the money to pay for it. At Anchor Wealth Management, we will help you to create a comprehensive financial plan addressing among other topics, college planning. Ideally, years before your child ever considers what college they want to attend. This way, you’ll never have to rely on student loans which can leave you and your child in debt for years to come. Give us a call today.