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A Mom's Guide to College Savings

Putting the Benjamins away for baby Benjamin's college tuition doesn't seem like a real concern when you're knee-deep in dirty diapers, but the sooner you start planning, the less stress on you (and Ben) later. "Time is a valuable asset when it comes to saving for college -- starting to save early can help with the cost," says Stacey L. Bradford, author of The Wall Street Journal Financial Guidebook for New Parents. Here's how to plan for the future and stretch your dollar.

Bank that $50 bill in the birthday card Put all monetary baby gifts into a college savings account, suggests Bradford. If a close friend or family member asks what they can give as a gift, say, "We would love to start a college savings account. It would be a meaningful and helpful gift."

Consider a 529 savings plan There are two types of 529 plans: prepaid tuition and college savings. Prepaid tuition plans, which are operated by the state government, allow you to lock in future tuition costs at participating schools at today's prices, providing a guarantee against tuition inflation -- but they may not necessarily include room and board. If you feel confident your child will go to a state school -- most plans require that the owner or beneficiary of the plan be a state resident -- this may be a good option. "You put money in today and basically get a credit in tomorrow's dollars," explains Bradford.

College saving plans, which have no residency requirements, are similar to a 401k: You invest in mutual funds, so there's risk involved based on the highs and lows of the stock market. However, there are age-based investment plans that become more conservative as your child grows closer to college age. Unlike prepaid tuition plans, college savings plans can be used toward tuition as well as room, board and supplies.

Dip into your retirement -- in a good way  Most people know that a Roth IRA (individual retirement account) is a way to save for your future, but it has some benefits for their future as well. If you withdraw money from your Roth IRA to pay higher education costs, including tuition, books, supplies, equipment, and room and board, the 10 percent early withdrawal penalty is waived.

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