I am currently pregnant with my first child and would like to start a college fund?

Question

I would need to be able to open it with a small amount of money and we would be making small contributions at first. Any suggestions. I really don't know anything about this whole process yet, so any light you could shed on the subject is appreciated.

Answer 1

I'm not sure what state you live in. It really does matter. My suggestion to you is to go to your bank or any bank, make an appointment with the financial consultant (it costs you nothing) and talk to them about a 529 plan. These can be started without a social security number (I think). They are awesome. You lose no money and the rate of return is based on the increase in tuition. If your child decides not to go to college the money could be withdrawn, but the penalty is very high. If the child decides not to go to college but you have another child or family member that wants to attend school, the money can be transferred.

Now, these are the rules for the PA 529s. Again, these are different state to state. Some states actually use different states' plans to avoid income taxes. Putnum is a great one.

Now, see why you need to talk to your advisor. I stress seeing the one at a retail bank and not an investment firm if your a beginner investor. It's a free consultation. They are also ethically bound by the bank to not rip you off and make you invest more than you can afford. A financial review should be done anytime you have a life changing event anyway, so this is the perfect time for you!!!

I hope the advise helps :) Good luck with the new rugrat!

Oh and in regard to the first answer about custodial savings account. They CANNOT be opened without the minor's social security number. Totten trusts can't even be opened without social security numbers. These regulations fall under the US Patriot Act. The only "FDIC" insured accounts that CAN be oped without a social security number would be any account that's opened under a Legal trust. Beneficiaries are not listed on the account themselves, but are named in the actual trust agreement set up by an attorney. Also, trust accounts avoid probate (estates) and are governed only by the trust agreement itself. What that piece of paper says---goes. Greedy family members cannot contest!

Answer 2

I'll bet you never thought there were so many options available! Don't worry I'll make it easy for you and give you additional info if you feel like knowing more. But you have half the battle won already - you decided to do something and actively save for you new baby. Often this is the hardest part!

The next step is to decide what type of account to open. I'll list the types available for you but I have kids of my own and decided on the Coverdell Education Savings Account. It's available at any discount brokerage firm. You can open it with $1 and shouldn't cost you a penny to open or keep open.

Do this when you have a SS# for your baby (the hospital will give you a form to request one with all the other paperwork you'll fill out there when the baby is born). I like the Coverdell better than the 529 plan because you pay fees for 529 plans and you can't control the account as much.



Here is more detail regarding your account options if you want:

Custodial account (UTMA) - parent or any adult opens for the child. The money deposited into it is an irrevocable gift. No real limit to what you can put in but gift taxes may come into play after a while. Drawback is that when the child is old enough it's his money and he can do whatever he wants with it. If he knows the account exists!

Coverdell Educational Savings account - parent opens the account and money grows without being taxed. Max per year you can put in is $2000 at this point. Money has to be used for educational purposes but it can be transferred to another child.

Minor Roth IRA - Funny how some people recommend the ROTH IRA but your child needs earned income for this. Consider it if your baby starts modeling early! Fairly uncommon otherwise.

529 plan - Higher contribution limits but less control over the assets in the account though and usually loaded with fees. If you will contribute less than $2000 per year go with the Coverdell.

Answer 3

ok we don't need to be fighting about abortion on here people.... I'd say talk with someone at your school if you feel comfortable with that. Your college should have some sort of health counseling program for sensitive matters like that. I'd say that if you don't think you will be able to raise the baby properly (in terms of money and a home, etc.), then don't go through with it. But if it is something that you really want and think you can do, go for it. Can you be a good mother? Are you ready for that kind of responsibility. P.S. Next time, think about this: If you think you're responsible enough to have sex and deal with ALL the consequences of it, then you should be able to take the responsibility of having a child, no matter how hard it might be.

Answer 4

First of all, assume you will qualify for financial aid when the college years roll around. That eliminates custodial accounts. They will ruin your chance for maximum aid by assuming 35% is for college. If the account is in your name, 5.6%. So the next choice is which type of account in your name. 529's, ROTH IRA and taxable accounts are your choices. 529's are for college only. ROTH IRA's allow you to take out whatever you have invested without taxes. This is better because if you don't need it for college, it;s there for retirement. Taxable accounts have the most flexibility but earnings are taxable. Everyone has different preferences based on the taxes and flexibility. I prefer the ROTH if you haven't maxed it out yet. If you have, I'd put a little in the 529 and a taxable account.

You never know what situation you will be in when your child is a senior in high school.

Answer 5

Open a 529 account using long-term mutual funds. College is a long ways away, so you can afford to take more risk than with a CD or savings account. Congratualations on your new baby!

Look into CollegeAmerica, everyone I know loves itfor 529s.

Answer 6

When I first found out I was pregnant, I opened a savings account under my name, but later switched it over to my child's name once she was born. That way you can start putting even $5 away, a week. I went into the bank and explained the circumstances and put on there a "lock" so to say, stating that my child,to be named at a later date, would be able to withdraw the funds from the account, but with my signature. I wasn't able to withdraw funds from the account, unless my child fell ill or (God forbid) passed away. Once there's enough money in the account then it can be rolled over into a CD or a Roth IRA.

Answer 7

start a basic savings fund or buy things like CDs at first. If you can afford $100 a month or somewhere along the lines of that, your childs college fund will be very well off by the time he or she gets there. Eventually, get a high yield savings account at 5% or more...this is the most guaranteed way to ensure your childs future.

Answer 8

Hi "What a sweet heart". I personally don't know how this process works, so why not find an at home position instead? You would work your own hours, set your own goals, what you wear doesn't matter, and you can make those morning runs to the bathroom without worrying about the outcome...will I make it to work on time? Will I need to change? I am sure you know what I mean..it is tough being pregnant and needing finances. If you would like an at home business opportunity as such, I know of a company that is currently offering two at home positions..you would simply need a phone and internet access. If you want more details, click my avatar image which will then take you to my YA profile. In my YA profile you will see a link that I have provided to the YA community, click this link, it will take you to the company's website. Review as little or as much information as you want about the company, and request an interview. Its that simple! Best of luck to you in your endeavors--and congratulations on being a Mommy! :)

Answer 9

I suggest you start looking into a 529 Plan for your child. SavingforCollege.com http://www.savingforcollege.com/ is an excellent resource on 529 plans

If you join your state's 529 plan, you can even deduct a portion of your 529 contributions from your state taxes. In Virginia, they allow for up to $2,000 as tax deduction - and if you contributed more you can deduct it from next year

Answer 10

Go to Gerber's site, they have low cost college funds available, and they will send you free info in the mail.