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That's GREAT! I'd recommend that you first set up an amount per month that you can afford to put into them so you're adding something monthly consistently (just make it like a monthly "bill"). And then later on would highly encourage you to do some type of education account and speak to a CPA regarding that. It'll make the money tax free as long as it's used for education and typically has a higher interest percentage rate that you can earn also. Savings accounts are a good place to start but as soon as you have the minimum that an education fund would accomodate I'd recommend transferring it into that instead to make the money work for you more (and like i said make it tax free as well).
Yep, some have minimums and some don't. The one I had looked into was a $5,000 opening minimum and a $100 a month contribution minimum but it was also pretty high yielding in the interest rate department. But I've seen some that are lower yielding but are $0 minimums to start with no monthly minimums.
Just depends on where you are financially on what would work best. Best to get with a CPA on that so you can find the best account for your situation and what you're looking for.
I got my 3 yr old one finally and very excited to see it grow! Everytime she gets money for Christmas or birthday I am putting it in. And DH&I are going to start putting a certain amount in every paycheck
It is highly recommended to fund your retirement accounts before contributing to college savings. THey can borrow money for college if need be, you can't borrow for retirement.
Putting any gift money in there is a great idea. It is what we've always done for our kids. Then as soon as they have enough, we open CDs for them to earn more interest.
I think this just depends. Personally I'm only 28. i'll be 37 years old when my son goes to college FAR from retirement age. He will need college money LONG before I need retirement money and as ones that have STOPPED borrowing for anything but the house I do not support student loans at all and he will be taught the same thing so he will either have cash in hand or get scholarships/grants but he will not borrow for school. So for us saving for college first is higher on the priority list. My husband contributes to a 401K type of account through work but saving for retirement will be coming after we save for college given our age and out son's age.
Chances are if you don't start saving for retirement until your son is through college, you probably won't have enough saved. Compounded interest makes a huge difference in saving for retirement, which is why they suggest to start early in life. It is hard to know how much money you will end up needing in retirement, you could live a long time, end up very sick, need specialized care, etc so it is better to play it safe than sorry. Personally I would rather let my adult (18+) children fund a good portion of their own education if they so choose than to become a burden to them in my old age when they have their own children to take care of.
We do both right now, but put more into our son's college than in retirement for now. Don't plan on retiring until at least 65 so we'd be able to save 100% at that point for 25 years. But we started saving for retirement when we were 18, so I think we're fine. My point was, I'd concentrate MORE on college right now than for retirement, not ignore retirement completely.
We also have hospice care insurance which once our regular health insurance runs out will fund a hospice type specialized care environment 100% for 50 years, this includes home health or hospice/specialized care faciliities and will kick in at any age.
I'm not concerned with the way we're doing things personally, just also saying I wouldn't teach your children to get loans for school. We advocate for no loans at all for anything except a house.
Last edited by SpazTaz; January 15th, 2011 at 12:20 PM.