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Get a head start on education savings | Motz


By Richard H. Mootz

The US Department of Agriculture estimates that the cost of raising a child to age 17 for a middle-income family will be around $285,000. This is approaching the median value of a new home in the United States
If you want to add the cost of education to that number, you can expect to pay an additional $26,820 per year for the cost of a four-year public university in the state.

But before you throw up your hands and send a junior out to find a job, you might want to consider a few strategies to help you prepare for the cost of college.

First, enjoy the time. The time value of money is the concept that the money in your pocket today is worth more than the same amount will be worth tomorrow because it has more earning potential. If you spent $100 a month on your child’s college education, after age 17 you would have saved $20,400. But that same $100 a month would be worth more than $32,000 if it had generated a hypothetical 5% annual rate of return. The bottom line is this: the earlier you start, the more potential you give your money to grow.

Second, don’t panic. Every parent knows that feeling – one minute you’re holding a little miracle in your arms, the next you’re trying to figure out how to pay for braces, piano lessons and summer camp. You may feel like saving for college is a pipe dream. But remember that many people receive help in the form of financial aid and scholarships. While it’s hard to predict how much help your student may receive in the form of aid and scholarships, these tools can provide a valuable supplement to what you’ve already saved.

Finally, weigh your choices. There are a number of federally and state-sponsored tax-advantaged college savings programs. Some offer prepaid tuition plans, and others offer tax-deferred savings. Many of these plans are state-sponsored, so the details vary from state to state. A number of private colleges and universities now also offer prepaid tuition plans for their institutions. It pays to do your homework to find the vehicle that’s right for you.

As a parent, you teach your children to dream big and believe in their ability to overcome any obstacle. By investing wisely, you can help overcome the financial hurdles of funding their higher education and smooth the path for them to pursue their dreams.

Richard H Mootz, CFP® CERTIFIED FINANCIAL PLANNER™ Professional, is a Registered Representative and offers securities through Securities America, Inc., a Registered Dealer/Dealer, Member FINRA/SIPC., Advisory Services Provided by Securities America Advisors, Inc., an SEC-registered investment advisory firm. Mootz Financial Solutions and Securities America Companies are not affiliated.

Richard H Mootz, CFP® CERTIFIED FINANCIAL PLANNER™ Professional can be reached at (530) 877-7007 – by email [email protected] or visit the website at www.mootzfinancialsolutions.com. Securities America and its advisors do not provide tax or legal advice. Please consult your tax or legal advisor regarding your personal circumstances. CA insurance number 0C75924

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