View a 529 Savings Plan as part of your family's overall financial plan. Set aside a predetermined amount each month, but pay the bills first. If you've blown past your credit limit on several cards, it makes more sense to pay the bank first because the interest rate of 20% or more can be crushing.

Be sure to read the 529 Plan's disclosure statement and discuss it with your financial advisor. If your kid doesn't go to college or enroll in an approved post-secondary training program, you may be hit with a penalty plus taxes on your earnings.

Withdrawals not used for education expenses are typically subject to income tax and a penalty. However, there are exceptions if your child receives a scholarship or is disabled. You can transfer the funds to another child to cover education expenses.

Caution: Investing in a 529 Plan in the child's name may not be a good idea because the student's assets may count more than the parents' financial status when applying for financial aid.

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