NORFOLK, Va. -- Children are going to start their first day of school on Tuesday, but just imagine that in several, or a few years from now, they may be starting their first day of college.
It's no surprise that the cost of education continues to rise, but parents try to make it achievable for their children. According to business analyst Dominick Miserandino, the question many parents ask is how can someone finance their child's education and how much will it cost?
"We try to predict the future and the questions will be how much will it cost, will I save enough,” Miserandino said. “When it comes to education it's so important to save as much as you can. It's hard to really predict exactly how much you need to save on that date and time."
He added that it is never to early, or too late, to start. He mentioned how there are parents who will start saving as a child continues through high school.
There are ways methods can help build up the savings for college tuition. The first financial vehicle Miserandino spoke about is 529 Plans. Both Virginia and North Carolina, like other states across the United States, have 529 programs, which have a myriad of financial benefits.
"You're money is growing without having to pay taxes on that growth every year,” Miserandino said. “So it's a really good advantage that you can also use towards K-12, through college, and certain other expenses you might not think of. Regular savings accounts don't have that tax advantage."
The money can be used towards tuition at private or public colleges. Miserandino said 529 plans can be started at any time.
Miserandino added 529 plans differ from state to state. If you plan to go this route, make sure you know what your plan involves and if there are any fees and penalties involved.
You might consider other investment vehicles – IRA’s, index funds, etc. -- but these investment vehicles may have their own sets of penalties and taxes. That may include having to pay taxes on earnings and withdrawals. It is best to consult a financial advisor to see what options may work best for you.
If you are thinking of going back to school, both Virginia and North Carolina allow you to open a 529 plan for yourself.