Making Sure Your Family Is Okay

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Making Sure Your Family Is Okay

When you have kids, it can be easy to think of the here and now and forget about the future. After all, since those diapers and messy rooms are happening in real time, it isn't always easy to hunker down and go over long term financial goals. However, making sure that your family is financially viable can help your kids to feel safe and secure for the long haul. I have been a financial planner for several years, and you wouldn't believe what a big difference a little planning can make. If you want to make a difference, go through my blog and learn how to save a little money.

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3 Mistakes Parents Should Avoid When Helping Pay For A Child's College Education

In this day and age, earning a degree from an accredited university or college is very important if a person wants to obtain a financially rewarding job. Unfortunately, the cost of going to college is continually rising. Many parents want to help pay for their children to go to college in order to help prevent their children from accumulating massive debt from student loans. But being able to contribute a substantial amount of money towards college expenses requires financial planning. If you have young children, avoid these costly mistakes when saving for college expenses:

Failing to Start Saving Early

When it comes to saving money for college expenses, the earlier you start, the better. This is especially true if you have more than one child and want to help pay for some or all of your children's schooling costs. Starting a college savings account as early as possible will allow you to take advantage of compound interest, so your money can grow. There are several different accounts that allow you to do this. A 529 education savings plan is a popular option that is designed specifically for college savings and also offers tax advantages. You may want to consult a financial planner for advice on the best option for your financial situation.

Borrowing from a 401(k) to Pay for College

If parents don't establish a college savings account when their children are young, they are often tempted to borrow money from their 401(k) retirement accounts to help their children with college expenses. Doing so can actually be a huge mistake that can be very costly. Depending on the rules of your 401(k) plan, borrowing a large amount of money may make you no longer eligible to have your company match funds. In addition, if your company goes out of business, terminates your employment, or lays you off, you will have a short period of time to repay your 401(k) loan, which can cause significant financial strain. Look into other options for paying for college before ever taking money from your 401 (k).

Ceasing to Make Contributions to a 529 Plan After a Teen Enrolls in College

When a child starts their freshman year of college, don't stop making contributions to his or her 529 plan. You are allowed to continue to contribute money to the account throughout their college career, and you will still enjoy the tax advantages and compound interest. Continuing to add money to a 529 plan will help make paying for college more affordable.