Start Saving and Make Your Money Work For You! Step 5

Step 5: Save for Your Kids’ College Tuition, Paying Off the House and Tackling Any Other Big Monetary Goal

Congratulations!

If you’ve gotten this far, your finances should be in the best shape possible. Now it’s time to address your remaining priorities.

Create overall savings goals and socking away money until you hit your newly revised target amount.

If you’re saving for multiple objectives at the same time, keep the funds in separate accounts rather than lumping them all into one. (That way, you won’t wipe out your emergency fund when you’re remodeling the kitchen for the big home sale)

Among the major goals you may still want to hit are these.

Saving for your kids’ college tuition: When it comes to this expense, defining the anticipated cost is tricky. Will your child attend a four-year private school or a public one? Run the numbers for both scenarios to see if saving 100 percent is realistic for you. Use the calculator at Savingforcollege.com, which factors in the rate of tuition inflation. Be aware that the cost may well exceed what you’re going to be able to provide. Consider a 529 plan. It allows contributions to grow tax-deferred, and withdrawals used to pay for college are federally tax-free.

Eliminating other debt (such as a car or home-equity loan): If you plan to use your savings within five years, keep your money in an account that’s stable and liquid, like a CD or a money-market, savings, or interest-earning checking account.

Buying that bar in the Florida Keys, remodeling the kitchen, buying the ferrari or ataining some other lifelong dream. As long as you are looking more than five years down the road you can afford to take some risk, so go ahead and invest a portion of your money in the stock market. I bought Ford (f) Time Warner (twx) and Google (goog) stocks about 10 years ago since I had a little over five years to go before my horizon. You win some - and well - you win some.


Good Luck folks - now save some cash!