If you have children and you worry about how you can fund their higher education, state governments and investment companies have devised ways to help you. A Section 529 plan is one of them.

What you probably do not know is that in order to get the tax break in this investment vehicle, you should use the money for college expenses. In various states, resident can take advantage of income tax deductions whenever they buy a 529 plan. The federal government likewise does not tax its earnings.

Unfortunately, it is not easy to predict the path that your son or daughter would take. For instance, your child might not need it because he or she can easily get a scholarship for being a sports star or an intelligent kid. Your darling son or daughter might also turn out to be a slacker and eventually decide against going to college.

In other words, if any of these scenarios happen, you cannot simply take the money out of the plan and use it to buy a home without a few consequences, such as paying an additional 10 percent tax penalty on its earnings. So, always put things in perspective before you make big financial decisions.