Talk to a parent about paying for college, and chances are you'll soon be discussing student loans. But your options go far beyond borrowing at the time your child enters school. Numerous possibilities are available to save in advance of college and to win scholarships.  What's your best college savings option? Most ACA advisors follow the rule to save in the most efficient place now and spend from the most efficient place later. Because tax laws and our lives are always changing, it's dangerous to conclude that any one option is the best place to save for something that's 10 or 20 years down the road.

Often the best place to save for a child's college education is the parent's Roth IRA, if the parent is eligible.

There are several advantages:

• The savings grow tax deferred, and the contributions can be taken out without penalty.
• The money stays in the parent's name, where it remains in the parent's control and typically has a smaller impact on college financial aid awards.
• Money in the Roth IRA can be used for various family members' college expenses.
• When money is withdrawn for college expenses, the Roth's earnings may be taxable but are penalty free.
• And of course, the funds may be needed for retirement instead of college. (Like many ACA planners,

I remind clients that children can always borrow to go to college, but their parents can't borrow for retirement.) If Roths aren't an option for parents, either because they have already maxed out their contributions or aren't eligible, the next choice may be a Roth in the child's name. If children have earned income, they can make a Roth contribution, which can later be used for their college education. And if the Roth isn't used for college, teenagers have either college money for their own little ones in the future or for the down payment for a house. (Or maybe you'll enjoy a fun golf partner because with such an early start, your child may retire by age 40!)

Another option is a Section 529 plan or Qualified Tuition Program. The donor (usually a parent or grandparent) makes a contribution into a Section 529 plan and investments are purchased within the plan, much like a 401(k). Investment options vary by state. Withdrawals are not taxable when less than or equal to annual qualified higher education expenses, adjusted for tax-free education assistance and amounts used to figure education credits.

A 10% penalty is imposed if the funds are not used for college education, but only the earnings are penalized. If a grandparent or parent has an estate tax problem, they can reduce their liability with a contribution to the beneficiary's 529 plan. This is considered a "completed gift," so it's no longer in the grandparent's or parent's taxable estate. Section 529 plans differ from other college savings options in many significant respects:

• Unlike Roth IRAs or other options, Section 529 plans aren't subject to income limits: you can contribute no matter how much you earn.

• Unlike certain prepaid plans, you can invest in another state's plan, and the student can go to school in any state.

• Unlike UTMA (Uniform Transfers to Minors Act) accounts (custodial accounts), the donor maintains control and ownership, so if your oldest child doesn't attend college, you can use the account to pay for another child's (or other relative's) college expenses.

The proceeds of a Section 529 plan can be used not only for tuition but also for books and room and board. (If the child lives at home, he can pay a room and board allowance specified by the school to Mom and Dad.) And if your scholar receives a full tax-free scholarship, the money can be taken out without incurring the 10% penalty.

Not all Section 529 plans are created equal. Ask your ACA advisor for help identifying the best plan for you and your beneficiary.

A related college savings option is the Upromise Credit Card (www.upromise.com). When you make purchases at any of more than 8,000 restaurants or 600 online retailers or you buy eligible items at the grocery or drugstore, a cashback percentage is directed into your Upromise account, which you can then use to fund a Section 529 plan or to pay college expenses or a student loan.

Of course, just about the only thing better than saving in advance for college is going to college for free. Websites such as www.Fastweb.com and www.Collegeboard.com/ScholarshipSearch can help you search for a fit between the student and any of thousands of available scholarships totaling over $1 billion. (One caveat: such sites can be rife with ads and special offers, so be careful when filling in information and checking boxes.) Other sources of college aid information include www.WiredScholar.com, www.FinAid.com, www.eStudentLoan.com, and www.Scholarships.com.

Trying to decide among all your college financing options can be confusing. A call to your ACA advisor can help you determine which options are best for you and offer you the greatest chance of realizing not only your family's college dreams but your other goals as well.

Guest contribution by,

Elizabeth Barrett, MA, CFP®< -->

My six-year-old niece asked for an iPod this past Christmas.  Not some kid-sturdy version of a portable CD player, not an MP3 player, but specifically an iPod.  She didn't get it (thanks to my sister-in-law's good sense). But the fact that she knew to ask for it-an expensive name-brand electronic device-astounded me.  Maybe it shouldn't have. Between what they spend themselves and what they convince their parents and grandparents to buy, American children have influence over nearly $1 trillion each year. Naturally, the advertising industry is well aware of our kids'

buying power. Like it or not, your children are a crucial marketing niche. Of course, the marketer's dream can be our nightmare. Who hasn't experienced the shopping aisle meltdown of a child who thinks you are the meanest parent in the world for not letting him get that new toy he saw advertised on TV? How many of us have tried to reason with a teenage girl who very seriously believes her life will be ruined by wearing clothes purchased from the wrong store? If it seems like a losing battle, it's no wonder: the average child is exposed to 40,000 commercials each year, manipulated by some of the most astute minds in the business world.

So it's also no surprise that our free-spending teens grow into young adults with poor financial habits and a skewed perspective about money and spending.  What does the future hold for young people who embrace a consumer lifestyle that can harm their long-term financial health? Constant exposure to the message that they deserve a fantasy lifestyle unfortunately leads many young adults to aspire to lifestyles their salaries can't come close to matching.

Here are some startling conclusions from a United Services Automobile Association (USAA) survey, High School Confidential:

An Inside Look at Teens and Money:

• Teens-half of whom aren't earning their own paychecks-spend nearly as much in "fun money" every month as their parents do.

• One teen in five expects to earn $60,000 or more at their first full-time job after high school or college.
• Nearly two thirds of teens expect to be millionaires in their 40s-or sooner.
• Forty-two percent of teens expect to retire by age 60.

Despite these findings, teens who learn good habits can become financially functional and successful. The present state of the economy presents an ideal teachable moment, allowing us to reinforce the lesson that our society, in many cases, is paying the price for living beyond its means. Use this opportunity to give your children an understanding of financial realities, and teach them to make responsible choices with money. For example,

if your teen gets a pile of birthday money, you can explain that without a plan, it could soon be frittered away. Help your kids realize they have choices about spending that money.

They can share it. One effective antidote for materialism is to stay mindful of the needs of others. Children exposed to the need around them in their community and the world at large have an easier time resisting that tempting pair of $90 jeans. The feeling your kids will savor from realizing the importance of the charitable donation can't be matched by any material luxury. Of course, encourage your kids to be purposeful about their giving, deciding on an amount or percentage to give and where they would like to donate.

They can save it. Teach your children to save at least 10% of their income, whether they receive it from their allowance, gifts, or a job. Aside from the obvious benefit of building their savings, developing the habit of saving will encourage them to live within their means. Offer rewards for reaching milestones in their savings, such as a monetary match or a family outing.

They can spend it. Help your kids recognize the difference between needs and wants and then choose their spending accordingly. We insisted on two rules when my kids first started making spending decisions: they had to wait at least a few days to make sure they'd still want the item, and they had to search for coupons and sales before buying anything. You could also have them list three other ways they could spend that money before they actually do.

Of course, teach your kids to use credit responsibly. They will be inundated with offers of easy credit, and they must understand the real cost of that credit and the consequences for default. They also need to know the value of their credit score and how to protect it. Let them try out credit with a loan from you for something they want, and if they default, repossess what they've bought. Better to learn by losing a small item now than a car or a home when they're older.

They can pay taxes with it. Sooner or later, we all learn that along with the privilege of living in this great country comes the duty (and in many ways the privilege) of paying taxes. Don't wait for them to be disillusioned by the take-home amount of their first paycheck. Collect a "family tax" on their income, and use it for something to benefit the whole family, like a group activity.

Parents can take heart: you are still your children's greatest and most important teachers (despite what your teens may tell you). Don't let the only messages they hear about money come from others with an agenda. Take the time to communicate your financial values to your children. Reflect on your personal financial philosophy, and be clear with yourself about your values and what you want to model for your children. Despite the efforts of clever and powerful marketing, you can counter the influence of our consumer-crazed society effectively.

Guest contribution by,

Erin Baehr, CFP®, EA   Shawnee-on-Delaware, PA< -->

Have you ever gone to the doctor, auto mechanic or other professional and left their office more confused than when you walked in?  Last week I met with a new attorney for a consultation.  Between our two businesses, we have five different lawyers we use for various purposes.  I'm not particularly pleased about that, but as life gets increasingly complicated, so too does the need for more attorneys.

I'm used to working with attorneys and have a basic understanding of most aspects of law, but we were discussing an area I'm not particularly familiar with.   As I listened to the lawyer sell himself, I became increasingly confused.  The more questions I asked for clarification, the more complicated the issue became.

It was at that very moment, while I sat there listening to him, that I realized the true value of a professional.  My job as a financial advisor, just like that of any other professional, is to make complicated things simple, so someone not in the field can understand them.  It seems that many "experts" use big words and complicated jargon to impress their prospective clients.  Instead of becoming impressed, I think most people get frustrated.

I did not hire that attorney, because I did not trust him.  He was not able to make the complicated, simple, which raised all the red flags.  Since I could not understand him, it would have been too easy for him to rip me off.  If you're seeking the paid advice of a professional, it's not your job to learn his profession, but rather his job to help you understand.  If you don't understand what you're about to buy or invest in, run for the hills.  You'll sleep better at night and always come out with more money in your pocket.< -->

If you've followed my writings for a while, you may have noticed my slant on financial planning is less about money and more about a rewarding and satisfying life.  Money is a necessary part of life, but not the purpose of it.  Sometimes we get so focused on earning money, that we forget what that money is for.

Here is a tale that always brings me back to reality when it's easy to miss the forest for the trees.   I've seen this many places so I don't know who credit as the original author.

It had been almost two years since the American businessman, with an MBA from a prestigious Ivy League school, took a vacation.  He had a very important role as a business advisor at a Fortune 500 consulting firm.  While vacationing in Mexico, he met a Mexican fisherman with a small boat who'd just caught a lot of fish.  Impressed by the Mexican's catch, the American began talking with him.

It was only 2:00 in the afternoon, so the American asked the man why he was coming in from fishing so early.  The Mexican said he had enough fish for his family and friends and had no need for more.  He continued by saying he wanted time to take a siesta, play with the kids, and have his neighbors over for dinner and dance.

The businessman proudly told the Mexican that if he worked longer he could form a corporation, buy more and larger boats and expand the company by exporting fish out of Mexico.  He continued by saying that after about 20 years the company would be large enough to sell for millions of dollars.

The Mexican was impressed by this idea and asked what he would do next.  The American said "that's when all the hard work will pay off."  He could sell the company, retire and live on the beach, spend his time doing a little fishing, playing with the kids, and enjoying dinner and dance with friends.

What do you think?  Does this make you reconsider what you are doing?  It serves a good reminder to me every time I read it.

I invite you to find out more by visiting http://www.cjrylantwealthmanagement.com and download the FREE workbook, 7 secrets to Financial Independence.

Chuck Rylant, MBA, CFP^©

C. J. Rylant Wealth Management

Photo: www.flikr.com

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In my last post I suggested that the hourly wage your employer exchanges for your life is worth far less than you think.  In this post I'm going to help you get a better handle on what that number really is.

To correctly estimate how much you're worth per hour, you need to first calculate how much time you spend doing things for work that you don't enjoy or wouldn't do if you didn't have to.  For example, would you go to the dry cleaner or spend time commuting to and from work every day?  What about going to lunch with co-workers that you may or may not really enjoy?  The same goes for work related functions like picnics or Christmas parties that you have to do if you want to climb the "ladder."

Would you still attend these events if there wasn't an unwritten expectation? Perhaps you would, or maybe you'd rather spend that time with family or friends?    There is no right or wrong answer.  But consider all the time you spend on work, either because you have to, or because you feel obligated to.

So to get to your real hourly rate, add up all that time and divide it by how much income you earn.  Let me give you an example and it may make more sense.  Suppose you earn $25 per hour and you work 40 hours a week; a fairly average income of $1,000 per week.  So do you really work 40 hours per week?

Let's assume you get up two hours earlier than you'd like so you have time to get ready and drive to work.  Also assume you spend an hour at lunch, when you'd rather be doing something else, and then another two hours in the evening commuting and decompressing from the stress of the day.

That eight hour day just became a thirteen hour day, and I bet that's low for many of you.  At 13 hours a day your $25 dollar wage just became $15.38 and if we take off 25% for taxes, which is probably low, your wage just went down to $11.54 per hour.  That doesn't even factor in the holiday parties, networking events or time spent buying clothes or picking up dry-cleaning.

But wait, there's more, as the popular advertising message says.  We just discussed time, but what about money you spend directly on your job?  Do you buy clothing that's just for work?  What about a nice car to fit in with your peers and the gas and maintenance costs?  Do you spend money on lunches that you otherwise wouldn't if you weren't working?  This is harder to measure, but you can get close.  The point is that you should factor in these costs and reduce your hourly wage accordingly so you know how much money you're trading your life, in exchange for your employer's money.

Now take a moment and really think about this.  Get a pencil, paper and calculator and jot down some estimates.  Seriously, do it now, and come back to this after you know your hourly rate.  There is a reason behind this exercise and when you understand it, your life and the way you handle money will forever change.

Check back for the final post where I show how understanding this is the key to a happy life.

Chuck J. Rylant, MBA, CFP^©