‘Your Wallet’: Time on your side when saving for college, Lincoln financial advisers say
LINCOLN, Neb. (KLKN) – When it comes to saving for college as a parent, time can be on your side.
The bottom line is: The earlier you act, the more you can save for your child’s future.
“The sooner, the better,” said Brett Shunkwiler, CEO and financial adviser for Shunkwiler Financial. “So if you’re thinking big picture, power of compounding. The sooner you can start, the bigger that dollar amount. Now it’s just, where do you put it?”
Money can grow faster the longer it’s invested.
Stashing money away as early as birth could mean saving twice as much, if not more.
A savings or checking account is not going to earn you a ton in the long run, according to local financial advisers.
They say to look into the better options available, like a tax-deductible 529 NEST plan. That stands for Nebraska Education Savings Trust.
“They have an age-based aggressive, moderate and conservative type, so as you get closer and closer to college, they will reallocate the portfolio,” Shunkwiler said. “So as you get closer, then it’s safer because you need the money.”
Otherwise, you can use stocks and mutual funds.
Both end up being taxable, but there are benefits down the line if plans change.
And a tax-free option to save could be through a Roth individual retirement account.
“As the parent, if I wanted to do that and use some of my Roth for my children, I could do that,” Shunkwiler said.
That way if you have multiple kids, you don’t need a NEST plan for each one.
“It’s kind of one pot that does multiple things,” Shunkwiler said. “And then if you don’t use that, then it can keep growing tax free” for your retirement.
Experts said the overall goal is to set realistic expectations, and you can do so with a financial adviser.
