Saving for College
What are the 3 most common mistakes parents make when saving for college?
1. Starting Too Late
People have a tendency to put off things that are way ahead in the future and think, "I'll worry about that later." The biggest mistake parents make is not setting up a college savings account early, right when a child is born. If you do that you have the power of time on your hands. Setting up the smallest savings account and supplementing that with the Mastercard rebate is good thinking. If you are going to be spending money on your child, you might as well scarf off a one-to-ten-percent of that and stick it in the college savings. Also a part of this mistake is not setting up a 529 account. Because what 529 accomplishes for people is to multiply your savings. Because you don't pay taxes on the interest that you earn or if you've invested in stocks, bonds, whatever, you don't pay any interest for that so it just compounds. It leverages your savings in a tax-free manner and is no cost to you. We want people to start thinking about it right when the baby is being born. If you don't, what unfortunately happens is your child will come out of college with a lot of debt that they have to repay.
Read more common mistakes...
