college
I will say that I made it a goal to have six figures in college savings for each child before retiring from medicine, and that money has time to grow before my kids will be of college age.
If you haven’t done the math to determine that you are investing enough to get to retirement by a comfortable age, then this should be your first priority. Don’t start saving for your child’s college education when you haven’t made a plan to take care of yourself first.
When you open a 529 plan, you have to name a beneficiary. Fortunately, you can change the name anytime. So, if your oldest gets a full ride to college, you can pass it along to their lucky younger sibling.
Instead of naming a different beneficiary for the 529 plan, you could simply take the same amount of money as the earned scholarship out of the 529 plan. The neat thing about doing this is that there is a rule that, in this specific situation, you are not hit with the 10% penalty plus tax for a non-qualified withdrawals.
One option that is often overlooked is using Individual Retirement Account (IRA) money. Yep, IRA money. You can take out money from these accounts for educational expenses. When using IRA money for educational expenses you will not get hit with the 10% withdrawal penalty. Even if you are less than 59 & 1/2 years old.