It’s Never Too Early – Or Late – To Start Saving For College



It’s Never Too Early – Or Late – To Start Saving For College


It seems like just yesterday when your child was walking into kindergarten, and now, you may have started planning where they’ll go to college and how you’ll pay for it.

Whether your son or daughter is 5 or 15, or regardless of whether or not you – or they – are emotionally ready for this rite of passage, we can help you at least be financially prepared.

The advice in this blog is just the tip of the ‘college prep’ iceberg but the sooner you start, the more you can chip away at it!

COLLEGE SAVINGS PLANS– If you haven’t started one already, start one now. Today. Pronto.

  • 529 PLANS

    529 plans are tax-deferred ‘savings’ or ‘prepaid tuition’ plans. Most every state offers a state sponsored 529 plan typically managed through a mutual fund company. (Google ‘college savings plan (insert your state here)’ to see what your state has to offer.) Each state determines how its 529 plans are structured, and many offer significant tax advantages such as a state tax deduction, deferral of taxes on earnings, and tax-free withdrawals for eligible college expenses.

    Also, there are two types of 529 plans: Savings and Prepaid Tuition. Savings plans are an investment account that you contribute to, and your account grows based on market returns. Prepaid tuition plans allow you to directly purchase tuition based on today’s cost for future use.

    The key benefit of 529 is that if the funds are withdrawn for college tuition, it’s not subjected to a tax. It’s a tax-free withdrawal. (Note: Contributions are NOT deductible)


    Another popular option is to save via a Coverdell (or ESA) account. More than a decade ago, the Coverdell education savings account became a very attractive college savings option for many people, including families wanting to save for elementary and secondary school expenses. (If you like the 529 plan, you may still decide to contribute the first $2,000 of savings for each child into a Coverdell account.)

    Coverdell ESAs have lower maximum contribution limits than 529 ($2000 per year per child). (529 plans generally have no restrictions on contributions, up to the maximum lifetime contribution.)

    Nervous or unsure about how to begin the process? Capital and Worth can set up a 529 or ESA account for you and create a savings plan that works with your budget.


Even with a well-stocked 529 or Coverdell ESA plan, chances are your student may want or need to apply for financial aid in the form of a grant or a loan. If your young adult is a smart cookie and/or an exceptional athlete, then hopefully a scholarship of some sort may await them. There are myriad types of scholarships in existence. Do some research based on your student’s major, their interests, your own personal career background, military service, etc. You’d be surprised at the types of scholarships that may be available for your child.


Last but not least, start thinking about the luxury ‘to do’s’ that you – and your child – currently enjoy. Dinners out? Round of golf? Movies? Spa treatment? Anything that you don’t truly ‘need’ to do will save you money; that $50 you were about to spend on dinner at a nice restaurant may buy your student’s ‘Intro to PsychologyStatistics/Chemistry/(insert subject here)’ book that first semester.

However you decide to financially prepare for your child’s college education, even a small step will help. But the sooner you start, the easier things will be. At least on your wallet!


Want to learn more about how to save for college? Contact Capital and Worth today.

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