MSU News Service

Rubber duckies vs college funds: how to build for babyís bachelorís

September 10, 2002 -- By Marla Goodman

BOZEMAN--If you invite Marsha Goetting to your baby shower, your newborn is likely to receive a gift of money and a friendly note inscribed, "A start on your child's education fund." It may not be as cute as a teddy bear or as cozy as jammies, but it packs a peace of mind that no rubber duckie can muster.

Goetting, a family economics specialist with Montana State University Extension, spends much of her time providing Montanans with information about estate planning and other financial matters, but dearer to her heart is the subject of helping people reach their goals through financial planning and budgeting.

Recently, parents with investments in stock market education funds may dread their quarterly statements for fear of yet another disappointment. With this in mind, Goetting says diversifying educational investments is important, and--good news--there are more choices than ever.

"It's not a matter of which one is best, but which combination is best," says Goetting, "and that depends on the family situation."

Bonds can be a smart way to invest, because you won't be tempted to dip into your nest egg to fund that trip to Las Vegas or new entertainment center. And EE bond interest used for education can be excluded from income. Goetting steers investors who want information about using savings bonds for education to

Montanans can also receive tax savings if they pre-pay for college tuition, fees, room and board through the Montana Family Education Savings Program. More about that program is described at

Other accounts have their own perks. Coverdale Education Savings Accounts can be used toward elementary, secondary or higher education expenses. You can only put $2,000 per year into them, but withdrawals for approved educational expenses are state and federal tax-free. Check these out at
The Hope scholarship credit of up to $1,500 per student can be used to reduce income taxes for the first two years of post-secondary education. Even Roth IRAs offer certain benefits if funds are used for college.

Goetting likes to remind people that even small monthly contributions add up over time. One of her favorite toys is a financial calculator that shows just how much a modest monthly contribution can grow over the years. It isn't hard to guzzle down $100 a month in specialty coffees and snacks alone. In comparison, a $100 contribution at 4 percent interest over 18 years adds up to $31,560 dollars.

Goetting has even written a book, "Using a Financial Calculator to Make Financial Decisions" that helps people figure payments on mortgages, car loans, credit cards, savings and investments. The book (#EB156) is $4.50 from MSU Extension Publications, (406) 994-3273.

If you want to get started saving money for college, Goetting recommends a handy-dandy guide developed by one of her Extension colleagues in Illinois that provides a good summary of the tax breaks for higher education. Look for it at

Further family economics resources are available through your local MSU Extension office, or by visiting

Contact: Marsha Goetting (406)994-5695

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