University of Virginia

Saving for College with Young Children

Parents of young children often ask what the best way is to save for college.  With so many choices out there, it can be confusing to consider 529s, IRAs, Savings Bonds, Coverdells, UGMAs,  Zero Coupon Bonds, Insurance policies and a number of others.  But you don’t need to make it complicated, you need to start setting some money aside.  The specific instrument you invest in is not the important point, it is that you are saving at all.  We suggest opening an account (in your name, not your kid’s) with a good mutual fund and making regular deposits.

The reason is simple:  you can always change the fund or tweak the amount, but you cannot get the time back, and time is your biggest ally when you have a financial goal to save for.

Once you’ve started your college fund, you can take some time to investigate the particulars of college savings:  what the options are, how they affect taxes and financial aid, what the dollar goal should be, and make appropriate adjustments.  Those are complex questions and we are happy to help you figure them out, but please don’t delay getting started.