In a tight economy like we are all dealing with today, managing your money appropriately and efficiently are arguably the most important things you will be dealing with on a day to day basis. There are varieties of different tools out there that will keep track of your expenses, as well as let you input a little bit of debt information. The majority of these sites or applications just organize your information in a user friendly type interface with a couple of graphs or charts that separate your expenses by category. Many will also allow you to put your salary information into the program to help you come up with a budget for each paycheck, and allocate some of the extra to savings.

Do any of the programs or apps actually define “savings” any farther than just the simple word? Saving means a lot more than just throwing your money into a local bank savings account which earns a quarter percent interest and feeling like you are doing the right thing. There is a place and a time to use a local bank savings account which is for money that you  think you will need to access to within the next 6-12 months. For all of the “real” savings out there such as retirement, savings for large expenses such as houses or children’s college, the local bank savings account may not be sufficient. You should consider a real interest bearing type investment that will have your money appreciate over time so that you will be able to meet your overall goals laid out above. Now that we have further defined the term “savings”, does your app or current program help you with this “real” savings we have just laid out? If you are like most people who bought the 5$ app on their mobile phone then the answer is likely no. So what is there to do then? Clariity could be the answer for you.

What Does Clariity Do?

Clariity does all of the same stuff as your normal saving app or budget app which will allow you to enter in all of your debt as well as income information. You will also be able to enter in checking accounts, savings accounts and credit card balances. Where Clariity begins to separate itself is by allowing you to add in your personal investments as well as different types of car loans or any other loans you currently have. After you have entered in all of the listed information the real abilities of Clariity start to show through. You now will be able to start different plans or goals of yours to begin working towards. Like the goals we listed above such as paying for your children’s college. In this plan that you set up, you will have the ability to enter in the amount you will be saving per month, the number of years in the future you will need to money, and the best part of all is Clariity will recommend options to help you with college savings.

Clariity’s Marketplace

This is what Clariity will do for you that other applications will not. Clariity will give you a list of different college savings plans such as the popular 529. Clariity will help you sort through the maze of all the options that are available to you based on the state you reside. There will be some quick information about the specifics of each plan such as the initial investment requirement, the fee you will be charged to manage the account, as well as tax deduction information.  The other plus side is that previous users can leave their comments and remarks based on any experiences (good or bad) on the plan that they chose.  Think of it as an “Amazon” like shopping experience.

With this revolutionary type of thinking, you will now not only be able to use this free application to manage your budget and see where your money is allocated to, but to actually set up the different types of savings plans you will need to be able to meet your long term goals. Along with the Marketplace feature where you are able to pick different types of investments to invest in, Clariity also has a blog tab. This blog tab will allow you to talk to all the other Clariity users out there about what type of investment decisions they are making, or which plan they feel is best when trying to send a kid through college. This sense of community can be very helpful when you are trying to make big decisions in life such as how to save for your children’s future college expenses.

Clariity is not only a budget tool, it’s also a life reform tool because it will help you not only to spend your money more efficiently and with a more clear focus, but to actually save for those big expenses you will encounter in your lifetime.

The Clariity Gift Card

A person looking for a meaningful gift for that special family member or friend can quickly and easily send a gift card with a few clicks. The gift giver selects a financial dream or leaves it to the recipient to choose a dream, specifies a gift card amount, and enters the receiver’s email address. Within minutes, the e-gift card is sent to the recipient that then s/he can then use to kickstart his or her financial dream. It’s that easy.

If you are still living paycheck to paycheck, or shoving money into your local bank savings account planning on that savings putting your children through college or helping you retire, then you need to start putting some Clariity into your financial future.

Clarity is not endorsed by or affiliated with LPL Financial.

Should I use my in-state 529 College Savings Plan or out of state?

This is quite a common question I get when dealing with a client’s 529 college savings plan for their child. The first thing to keep in mind, is that your child does not have to go to an in state college if you use your state 529 plan. That’s a common misconception and should be noted. For example, my son is actually participating in the state of Virginia’s plan (I’m in Illinois), but he could go to school in Indiana if he so chooses (and he gets a scholarship).

In-State 529 Plans

For in-state 529 plans, the hosting state will usually offer the residents of that state a special incentive, such as reduction of state taxable income for deposits. This may be enough incentive to take advantage of the state plan. To find out the actual specific enticements of your state, you can go to FINAID.org, collegesavings.org, or savingsforcollege.com to find out.

Taxes might make all the difference

Initially, you should check your state to find out how valuable those tax breaks may be. Upon figuring out the tax break, the next most important thing is the underlying investment options within the plan. By doing a little research, you can see if the investment options are satisfactory enough to justify getting the tax incentive by using the plans by possibly giving up investment return. You may also discover that the in-state plan may have higher fees. Obviously, this would be a consideration to use an out of state plan. Please consult a tax professional to see if the state plan is best for you.

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Recently, I just celebrated my son’s 1^st birthday party. Like any new parent I am still wondering where the first year went. Although I do not remember my first birthday celebration, I can be confident that the gifts my son received far surpassed my gifts for my first couple of birthdays (this is where I give a shout out to all our family and friends). In addition to all the wonderful gifts, we also received several checks. Of course, the little man doesn’t appreciate those checks now (I promise you that mommy and daddy do), he will appreciate them when those checks are helping him attend college.

Introducing the 529 College Savings Plan

Many people (parents, soon to be parents, and grandparents) ask me where the best place nowadays to put money away for school. For me, the 529 College Savings Plan is an easy choice. Let me run down a few of the reasons that it made sense for us and could make sense for you, too.

We will always be in control.

With 529 plans the owner (could be parent, grandparent, aunt, uncle, etc..) is always in control of the money, unlike custodian accounts under the Uniform Transfers to Minors Act (UTMA). So when little one decides at 18 he wants to take his money and run, he can run but won’t get very far.

Tax Free Is Never a Bad Thing.

Like Roth IRA’s, the money that comes out of 529 plans will be tax free as long as used for “Qualified Higher Education Expenses”. These can include tuition, room and board, mandatory fees, required books and computers, etc.

Scholarship Provisions.

If our kid becomes the next Tom Brady like I expect him to be and receives a full ride to College USA of his choice, you are allowed to pull the scholarship dollar amount out of the 529 plan tax and penalty free.

Balance Transfer.

If the above mentioned occurs or of if school just is not in your kids future, you can always transfer it another child or even another family member.

No deadlines.

Your child does not have to use it before a certain age. So if they decide to go back and apply for an MBA or PHD, it still is good.

Thus far we have blessed with any money received has gone straight into the 529 account. But then the next question is, “How much do you save for College?” That will be soon to follow.

References: IRS Publication 970