The New Year is a good time for looking back at what you've accomplished, and coming up with new ways to achieve your goals. As you start your new work out regime, try eating healthier, and turn off the Blackberry to spend more time with your family—also consider some helpful financial tips that will help you better plan and save for your child's college education?
- Give your budget a second look. Before you start setting your savings goals for the year, why not take a closer look at your budget? Look for things you could save money on—like credit cards, other kinds of debt, that daily latte at Starbucks, the $ 10 lunch, or expensive hobbies you might be able to do without. Even an additional saving of $10 a week can make a substantial impact to your goal. For example, if you were to put $10 a week in a 529 plan, and it grew at a rate of 4%, in 18 years, you would have approximately $ 13,700 to help fund your child's education.1
- Plan your finances in a tax-smart way. Are you using a tax advantaged vehicle to save for your goals? If college savings is on your list, consider vehicles such as 529 plans that may offer some helpful tax advantages. Take the time to familiarize yourself with how the tax advantages can benefit you. Consider discussing it with your account or tax consultant. As this year's tax forms arrive and you start to calculate how much you owe and how much you've paid, think about the benefits of a low-tax savings option.
- Remember to stay the course: 2009 was a tumultuous year when it came to investing. Even if you weren't heavily invested in stocks or mutual funds, you probably felt the impact in your retirement plan. At times like this, you might want to completely turn away from investing—or if, you are a seasoned investor, you might be tempted to chase gains. But the best course is often the steady one. Instead of changing your investment plans based on what the financial markets did in the last few months, make a plan for the years ahead.
- Leverage government initiatives. If your child is close to college and you are disheartened by your savings efforts, don't give up. Thanks to large and growing educational stimulus spending, your child may find opportunities for more loans, grants, and scholarships than ever. If they've applied for loans, grants, and scholarships in previous years and missed out, 2010 is the perfect time to try again. You might find that some new programs are perfectly designed to help you out.
- Know your options, and don't be afraid to ask for help. Nobody ever said that saving for college was easy. Fortunately, there's lots of information available, and plenty of sources for hints and tips. You can compare savings options, look into more affordable degree options, calculate where you stand and ask experts if you need more guidance.
The College Within Reach team wishes you the best of luck in the New Year, as you put your college savings plan into action—and help seek the dream of college.
1The calculation assumes a $10 weekly contribution for a period of 18 years and a 4% annual rate of return. The calculations are for illustrative purposes only and the results are not indicative of the performance of any investments. The calculations do not reflect any plan fees or charges that may apply. If such fees or charges were taken into account, returns would have been lower. With any long-term investment, investment return may vary. Such automatic investment plans do not assure a profit or protect against losses in declining markets.
Investments in 529 college savings plans are neither FDIC insured nor guaranteed and may lose value. Please note the plan's disclosure document includes details such as investment objectives, risks, charges and expenses, and other information that you should read and consider carefully before investing. Plan disclosure documents can be obtained directly from the plan. Investors should consider before investing whether their or their designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program and should consult their tax advisor.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc.
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