As a man with children and an ex, I’m always keeping my eye out for things to help my daughter out (and me) out financially. One important thing that you can do at the end of the year is start planning for your kids future, both financially and educationally, and one way that I’ve done that is by using a 529 plan.
A 529 plan is an investment vehicle for future educational expenses that grows federally and state income tax free that has various rules and regulations based on the state in which you live and the specific plan in which you want to enroll. In Colorado, the plan that I enrolled in was found at CollegeInvest.org, and I can tell you from experience, it definitely pays to shop around for a plan, as fees and past performance can be vastly different. Also, in my plan, my ex has no claim to the money invested and my donation to the plan is state income tax deductible up to $250.00 as long as I donate that amount to my daughter’s plan before year end. Nice. Another bonus is that if your children don’t use the 529 money, you can use it yourself for qualified expenses, and in other cases, for unqualified expenses, although a tax hit would probably occur. If my daughter doesn’t use the plan that I started for her, I’ll buy a boat and give it her name instead. Probably.
Naturally, before you were to invest in such a thing, you definitely want to do your research or talk to a financial planner or another tax or financial professional before you jump. For me, though, it’s perfect. Better, I feel like I’m doing something positive for my daughter, as I suspect that college expenses in the future will be astronomical and I have no indication that my ex is doing any planning for my daughter’s educational future, period.
But now is a great time to look at some sort of educational planning for your kids. Take a look at it.