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It’s the begin­ning of the school year and you’re think­ing about your child’s future edu­ca­tion. Your child is bright and will be going to col­lege, so the time to start plan­ning is now. Many par­ents begin plan­ning for col­lege early to cre­ate an edu­ca­tion sav­ings account for their child’s edu­ca­tion. How to save for your child’s edu­ca­tion is the big ques­tion that is asked, as there are many dif­fer­ent ways to save for edu­ca­tional pur­poses. One poten­tial prob­lem with an edu­ca­tion sav­ings account is tax­a­tion and asset respon­si­bil­ity as it per­tains to finan­cial aid eligibility.

There are some dif­fer­ent meth­ods par­ents and grand­par­ents can use to save for a child’s edu­ca­tion. It’s impor­tant to con­sider tax­a­tion, eli­gi­bil­ity and growth aspects of the dif­fer­ent sav­ings plans. Many finan­cial advi­sors rec­om­mend plans that are more aggres­sive and risky in the early child­hood years, but con­vert­ing over to more con­ser­v­a­tive tac­tics in the years that are closer to the start of col­lege. One rea­son is that there is less money to risk in the begin­ning, so higher risk invest­ments are accept­able. In years closer to the start of col­lege, any edu­ca­tion sav­ings account risks should be min­i­mized to con­serve the larger amount of sav­ings accumulated.

There are four major meth­ods used to fund col­lege expenses:

1. Sav­ings plans -Coverdell Edu­ca­tion Sav­ings Account (CESA), state oper­ated Sec­tion 529 col­lege sav­ings plan, UGMA/UTMA cus­to­dial account, tra­di­tional or Roth IRA, 401(k)
2. Invest­ments -stocks, sav­ings bonds, life insur­ance, trust funds
3. Bor­rowed cash – loans
4. Grants, gifts and schol­ar­ship money-gov­ern­ment and other schol­ar­ship programs

Some sav­ings plans jeop­ar­dize the child’s abil­ity to qual­ify for var­i­ous grants, gifts or schol­ar­ships based on need because the sav­ings cre­ate too much in the way of assets in the child’s name. This is where a reg­is­tered finan­cial plan­ner can help with deci­sion mak­ing with regard to the var­i­ous types of sav­ings plans. In sim­ple terms, sav­ings earn inter­est while bor­row­ing costs inter­est. Col­lege tuition sav­ings plans should be set up so that the great­est tax advan­tages are real­ized. Sav­ing can cut costs by about half the costs of bor­row­ing, espe­cially when sav­ings accounts are started when the child is born.

Com­mon rec­om­men­da­tions about col­lege tuition sav­ings include:

1. Start early
2. Invest care­fully
3. Diver­sify investments
4. Keep in par­ent names
5. Avoid cap­i­tal gains shortly prior to college
6. Use tax-advantaged accounts

Some pre­cau­tions include keep­ing col­lege tuition sav­ings assets in the parent’s names. If accounts are in the child’s name, once they reach the age of major­ity, they can do what­ever they wish with the accounts. Tax rates may also be more favor­able if assets remain in the parent’s names. High assets in the child’s name may neg­a­tively affect appli­ca­tions for aid, grants or gifts. Stu­dents can file for assis­tance using FAFSA, the Free Appli­ca­tion for Fed­eral Stu­dent Aid. All col­lege tuition sav­ings plans are sub­ject to future changes that Con­gress may imple­ment; always work closely with your finan­cial advi­sor to deal with changes.

No mat­ter which course of sav­ings you select, the objec­tive is to have suf­fi­cient money ready to pay for col­lege expenses that are jump­ing higher at roughly twice the rate of ordi­nary infla­tion. Care­ful plan­ning and con­sul­ta­tion with a reg­is­tered finan­cial advi­sor can help you deal early with poten­tial prob­lems so that this wor­thy goal can be achieved on best terms.

Taking control of your finances can be an important step in securing your financial future. Taking professional financial advice can help you on your way. Many of us will go through life without ever seeking financial advice from professional financial advisor, taking advice instead from friends, colleagues and online resources. While this may serve your needs to a certain extent you could be losing out.

You may want to seek professional financial advice if, for example:

1. You are considering taking out a mortgage
2. You are looking to join a pension scheme
3. You are looking for an insurance deal
4. You are considering taking an annuity
5. You are looking to make an investment

The financial market is a complex place, with a huge range of products available whatever kind of service you are looking for. From mortgages and investments to savings and pensions, the vast array of products in each of these areas can be bewildering when trying to find the option that will best suit your future financial needs, and this is where taking professional financial advice could help you.

There are three main types of financial advisor available. Those tied to one provider, those tied to a number of providers, and independent financial advisors. If you’re looking for financial advice that will help you to make sense of the full range of products available on the market, it is a good idea to seek out a reliable independent advisor.

You will usually need to pay for professional financial advice, so you should always make sure you understand what your advisor is going to charge for a service before proceeding. You should also check that any advice taken comes from a financial advisor who is registered with the Financial Services Authority.

Whether you are seeking specific advice or general advice for future savings and investments a professional independent financial advisor may be able to help you to get the best deal for your money.

It is an independent financial advisor’s job to have an excellent understanding of the market and to tailor their service to your needs. With new products coming onto the market every day this can save you a lot of trouble and ensure that the financial advice that you receive is coming from a knowledgeable source.