Start Early, Save Often

Can Nathan start a college fund for his baby ... if he has no baby yet?

QUESTION: Nathan and his wife are on Baby Step 2 and have $3,600 left to go. They want to start a family in the next few years and wonder if they should start investing for college, even though they have no kids now. Dave says they can start, but can’t put it in a certain type of account.

ANSWER: You can start something, you just can’t put it in a specialized college fund until the child is here and has a Social Security number. Just have a mutual fund that you open in your name and throw money in your name. It’s nothing special. When they come, use that money to fund their educational savings account. You can put $2,000 in there a year, but it will grow to $126,000 in 18 years. As long as you are doing all right with money, it’s all right to not save for college before the kid comes. If you start while they’re young, you’ve got plenty of time.