We are encouraged to participate in government approved plans for college education and retirement.  There may be tax advantaged opportunities by participating in government approved qualified plans; but along with the “advantages” there also may be disadvantages.

Traditional financial advice would lead us to compartmentalize our savings into several different “buckets.”  When the time comes to use a specific bucket of money that fulfills the goal, we then begin to contribute to another bucket for yet another specific goal.  If you follow this thinking, you will certainly want to participate in a 529 college savings plan as these plans relate to one specific goal.  As an alternative to government approved restrictive plans, why not pick a financial parking place for your money that is tax efficient, accepts contributions for any purpose and withdrawals for any purpose at any time?

Understanding the importance of having access to your money at any time for any reason is what we believe to be a priority in a financial plan.  If you find yourself contributing to a government approved college savings plan, IRA, 401k, etc. and simultaneously maintaining non-deductible debt because you do not have access to your own money, you may want to rethink your strategy.

College education expense continues to rise.  To offset this expense many have exposed their money to unnecessary risk.  Subjecting your money to increased levels of risk as a means to meet college expenses can be detrimental.  Should the investment not perform as expected, there may not be enough time for your money to recover.   

The best way to plan for college expenses is to follow a plan that allows for the best tax advantages and safety without restricting the use of your money.