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Editor's note: This is part three of our three-part series on 529 plans — Caroline's interview with Sarah Henriksen, a vice president with Wells Fargo Funds Management. You can read part one here and part two right here.

CH: How much money do you need to start a 529 plan?
Sarah Henriksen: Typically you can open an account with as little as $250. And, many 529 plans waive this minimum if you set up an automatic investment into the account of as little as $15 per month. A program of regular investment cannot assure a profit or protect against a loss in a declining market.

CH: How much can an individual contribute to a 529 plan per year?
SH: We talked about the low limits for starting a 529 plan. On the other end, 529 plans have very high contribution limits. There is not a specific annual limit as long as you don't exceed the 529 plan maximum, which can be over $300,000 depending on the plan. One thing to keep in mind is 529 contributions are considered completed gifts to the beneficiary, subject to the annual gift limits. For 2009, the annual exclusion amount is $13,000 (or $26,000 for married couples), which means any contribution over that amount may be subject to gift tax. If you are looking to make a larger contribution in one year, you can contribute up to five times the annual limit without incurring gift tax by prorating that contribution over the next five years. This is a unique benefit of 529s, which is not available through any other investment vehicles.

CH: Is there a total contribution limit?
SH: Most 529 plans set their contribution limit with the goal of allowing families to invest enough for five years of college, plus graduate school. As you can imagine, this means the total contribution limit for most 529 plans is quite high. Depending on the plan, the limits can be $300,000 or more.

CH: How is the money withdrawn to make college payments?
SH: Another benefit of 529 plans is that the account owner controls when and how a payment is made. This means you can ensure your funds are used for school expenses and not concert tickets or the latest video game. And, most 529 plans offer a lot of flexibility for withdrawing the funds. You can choose to have funds sent directly to the school, to the beneficiary or even to yourself if you want to get reimbursed for expenses paid out of pocket.

CH: Can participants continue to contribute to the plan while the student (beneficiary) is in college and making withdrawals?
SH: Absolutely! A recent study from the American Enterprise Institute found that fewer than 60% of new students graduate from college in less than 6 years!* Chances are, your student will be attending school for years, and if he or she decides to attend graduate school, that can increase even more. 529 plans provide the benefit of being able to contribute while students are still in college in order to take advantage of the benefits the plan offers while they are attending.

CH: What is a good source to learn more about 529 plans?
SH: A great place to start would be on the Wells Fargo website at www.wellsfargo.com/investing/education/529.

*Diplomas and Dropouts Which Colleges Actually Graduate Their Students (and Which Don't) by Frederick M. Hess, Mark Schneider, Kevin Carey, Andrew P. Kelly. AEI Online, June 03, 2009.

Remember: 529 plans involve risks, including the possible loss of principal. Consult a program description for additional information on risks.

Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment management and administrative services to certain 529 college savings plans. Shares in these programs are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company.

INVESTMENT PRODUCTS * NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE

Caroline

Editor's note: This is part two in our three-part series on 529 plans — Caroline's interview with Sarah Henriksen, a vice president with Wells Fargo Funds Management. You can read part one here.

CH: What are the tax advantages involved?
Sarah Henriksen: 529s offer a number of tax advantages. For the average investor, they can typically be broken down in three categories: when the money goes in, while it is invested, and when it comes out. For money that is invested in a 529 plan, many states offer an upfront state tax deduction or credit. This will depend on whether your state offers this benefit and often time requires investing in your own state's plan. Because of this, it's important to consider any benefits your state's 529 plan might offer when deciding where to invest. While the money is in the plan, it grows tax-free. This means any earnings or growth in the account will not be taxed while it is invested. Finally, when the money comes out, as long as it is used for a qualified expense, it will be completely federal tax-free. Most states also offer state tax-free withdrawals as well. This can be an extremely valuable benefit especially if your account has increased in value over a number of years.

529 plans also offer unique tax advantages for families with estate planning needs, such as the ability to move assets out of your taxable estate, while still retaining control of the account. As always, it is important to consult your tax advisor to determine how these various benefits might apply to your situation.

CH: What can the funds be used for? Tuition? Books? Living expenses?
SH: The funds from a 529 plan must be used for higher education expense, but beyond that there is really a lot of flexibility. Qualified expenses include tuition, fees, books, and any supplies or equipment required for enrollment or attendance. Room and board is also considered a qualified expense for students enrolled at least half time. In addition, for tax years 2009 and 2010, computer expenses are also qualified, regardless of whether they are formally required by the school. I should also point out that if you need to take money out to pay for some other type of expense, this is possible. However, the earnings on any "non-qualified" withdrawal will be subject to income tax and an additional 10% federal tax.

CH: What type of schools can 529 funds be used for?
SH: 529 funds can be used for almost any post-secondary school across the country and even a number abroad. This includes technical, vocational, two- and four-year colleges, universities, and graduate schools.

Remember: 529 plans involve risks, including the possible loss of principal. Consult a program description for additional information on risks.

Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment management and administrative services to certain 529 college savings plans. Shares in these programs are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company.

INVESTMENT PRODUCTS * NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE

Caroline

Editor's note: This week we're featuring a three-part series on 529 plans. To bring you details about how 529 plans work, we interviewed Sarah Henriksen, a vice president with Wells Fargo Funds Management.

First, let me give some background. A 529 plan is a tax-advantaged investment plan for parents or others who wish to invest money for higher education expenses. They are state-sponsored programs, usually managed by a financial services firm. Tax advantages and a surprising degree of flexibility are just a few of many benefits that families derive from 529 plans.

CH: So Sarah, who can start a 529 plan? Does it have to be a parent?
Sarah Henriksen: 529 plans offer a lot of flexibility as far as who can start a plan. Generally, anyone of legal age can open an account for someone else. This can include parents, grandparents, aunts, uncles, even your neighbor.

CH: Can multiple individuals contribute to the same plan? (Parents and grandparents, for example?)
SH: Most 529 plans strive to offer a lot of flexibility by allowing anyone to contribute to the same plan. However, rules vary by plan so it is important to consider different plan features before opening an account. Note that most plans also allow flexibility to open multiple accounts for the same beneficiary; for example, if both the parents and grandparents want to maintain control over their own contributions.

CH: Who can utilize funds from a 529 plan (in other words, who can be the beneficiary)?
SH: Although some state pre-paid tuition programs impose age and residency requirements, with 529 savings plans there are no restrictions or age limits on who can use the funds. The beneficiary can be a newborn through adult. In addition to investing for a child's future education expenses, an adult looking to go back to school can open an account for his/her own higher education expenses.

CH: Can there be more than one beneficiary per plan? (In other words, can you have a single 529 plan for multiple children?)
SH: Only one beneficiary can be listed per account. However, it is possible to open an account for one student, and then later change the beneficiary on that account to a new student. The only requirement is that the new student must be a "member of the family" of the previous beneficiary. And of course, you can always open more than one account for each student. This may make particular sense if your students will be starting college at different times, which might make different investment options more suitable for their respective accounts.

CH: What if the named beneficiary decides not to attend college — what happens to the funds? Could another beneficiary use them?
SH: This is a common question parents have when investing for college, especially if their kids are young. Since you can never know for certain whether your child will attend college in the future, a nice feature of 529 plans is the ability to change beneficiaries to another family member. If your child decides to take a break from school or has funds left over, the money can also be kept in the account in case he or she returns to school. If it looks like the money will never be needed for higher education expenses, the money still belongs to the account owner and can be withdrawn at any time. At that point, however, the earnings on the account would be subject to tax and a 10% penalty.

CH: If the beneficiary is already in high school, is it "too late" to start a 529 plan?
SH: It's never "too late" to start a 529 plan. Any amount you are able to put away ahead of time is going to help when it comes time to pay for college. You will still enjoy the tax-free growth of the plan as well as potential state tax benefits, depending on where you reside. Most plans offer conservative investment options for families that have a shorter timeframe until they need to access their funds.

Remember: 529 plans involve risks, including the possible loss of principal. Consult a program description for additional information on risks.

Wells Fargo Funds Management, LLC, a wholly owned subsidiary of Wells Fargo & Company, provides investment management and administrative services to certain 529 college savings plans. Shares in these programs are distributed by Wells Fargo Funds Distributor, LLC, Member FINRA/SIPC, an affiliate of Wells Fargo & Company.

INVESTMENT PRODUCTS * NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE

Caroline

If you're a high school senior, the cost of college probably isn't your top concern right now. Usually during that first semester of senior year, you're more worried about getting into the school you want  — not how you'll pay for it.

For a lot of students, saving money for college doesn't feel like an urgent matter until the summer before you leave — when all the "busy-ness" of senior year and excitement of graduation are past. By that time, you know where you're headed for school and how much financial aid  you're getting and it all finally feels real.

Unfortunately, June is a little late in the game to start a real savings plan for fall. You'll be better off if you start concentrating on saving right now.

So how can you get motivated? Try to make it real for yourself. Forget about the vague, fuzzy "saving for college" idea — start thinking more specifically about what things you'll need to pay for next year. No matter where you go to college, you're going to have some of the same expenses , so list them out and use them as goals to save for. Here are some ideas:

• Laundry money — laundry will probably cost around $5 a week. Plan on 40 weeks worth of laundry, and make a goal to save $200 to stay in clean clothes for the entire year.
• Eating out money — even if you stick to your pre-paid meal plan, that generally doesn't include supper on Sunday nights. Figure you'll spend $10 eating out on Sunday nights each week — and aim to save $400 to cover Sunday meals for the year.
• Books — these will probably run anywhere from $200-$600 per semester. Set a goal of saving $500 for your first semester's books.

These are just a few of the basics you'll need a stash of cash to cover during your first year of school. Try saving for just one of these items to make it a really achievable goal. It feels good to know exactly what you're saving for — and what it takes to get there.

Are you saving money for college? Tell us how it's going!

Caroline

Remember your senior year of high school, when all anyone could ask you was "Where are you going to college?"

Well, now that you're in college, the questions keep on coming, but this time you get it from every new person you meet (which is a lot your freshman year): "What's your major?"

If you're undeclared, that gets to be a pretty short conversation. And eventually you do have to settle on a major. So how are making the major decision? Here are some ideas to get you started:

1. Take some career aptitude tests. Check with your academic advisor to see if he or she can recommend some good tests. You can find a number of these tests online, but beware — they may be commercially linked, so it's probably best to get some advice before diving in.
2. Ask the people who know you best. I majored in journalism on the recommendation of my brother. I loved to write, so I don't know why journalism hadn't occurred to me. I guess at the time, I wasn't thinking about my talents as much as I was thinking about what I "should" major in to get a good job.  Entertain the ideas of those who see you from the outside looking in. They shouldn't make your decision, of course, but they may have some good insight for you.
3. Explore potential jobs. Check out potential jobs as a way to explore different majors. Do some volunteer work, get an internship, do some job-shadowing — and always ask people what they majored in. You're likely to find some surprises along the way — and you might get some career-path ideas.
4. Do some research. Thumb through your school's course catalog, check around online, browse some career-books, read articles and reports about fast-growing career fields  and list anything that catches your eye. It's a good way to gauge your interests, and remind yourself what's out there.
5. Know what you're getting into. As you're making your decision, definitely follow your heart and your talents, but be realistic and know what you're getting into.  Think not just about the major but about the career path you plan to follow. Consider what jobs in the field will pay and compare it to what you're paying (and borrowing) for school. Be sure that reality plays some part in your decision and that you're keeping the future in mind.

Have you decided on a major? How did you make your decision?

Caroline

If you're a high school senior, how are you going about exploring the colleges that interest you?

Are you searching online? Talking to your parents or guidance counselor? Reading up on the literature colleges send you?

These are all good approaches, but when it comes to choosing you college, nothing really beats an in-person visit to the campus. Many campuses host special "Senior Days"  where you can get a personal tour, lots of good information and maybe even some cool freebies like game tickets.

It's great to visit on a Senior Day because of all the pre-planned sessions just for you. But if you can't make it to a pre-scheduled day like that, check out this link  for some help for planning your own campus visit.

If you've already attended a Senior Day, let us know how it went!

Caroline

We all make mistakes. But money mistakes come with a price.

Recently Wells Fargo made a change to its overdraft charge policy that makes those mistakes a little easier to swallow!

In the near future (the final date’s still TBD), your account will not be assessed overdraft fees if you become overdrawn by $5 or less. Also, no more than four overdraft charges will be charged per day.

Also, in the coming months, customers who want to opt out of overdraft coverage will have that option — you’ll be able to specify that you don't want your transactions authorized or paid into overdraft if you don't have funds to cover the transaction.

That's all good news, but more importantly, how can you avoid overdrawing your bank account in the first place? Just a few simple ideas:

• Bank online. Get yourself set up for online banking, so you can view your account any time. You can see pending transactions and easily transfer balances from one account to another, which can help you avoid overdrafts.
• Sign up for overdraft protection. At Wells Fargo, enrollment in overdraft protection is free, and can dramatically reduce the fees you're charged for overdrawing your account.
• Sign up for mobile banking. Right now Wells Fargo is offering this service for free. It allows you to keep track of your account, like check balances, review recent activity, and transfer funds — all from your mobile phone.
• Go low-tech. Although many online tools are helpful, you don't have to be high-tech to keep good track of your bank account. Use a good old-fashioned check register to record all your account activity: check card purchases, deposits, ATM withdrawals, etc. You can also use this as a backup, even if you're banking online.

So tell us: How do you keep track of your bank account?

UPDATE: Oops, we jumped the gun on our original post! We recently learned these changes to our overdraft policies are a work in progress, which means they’re not yet available. We’ve updated our post to reflect that! We apologize for any confusion this may have caused and will let you know when those services are up and running.

Caroline

As a high school senior, you've got a busy year ahead of you. While you might be mentally ready to set things on "coast," now is not the time for that! Besides keeping up your grades, you've got a bunch of prep work to do to get ready for college. It's all pretty deadline oriented, so if you haven't created a master calendar yet, it's a good idea to start one.

Here is a basic timeline of things you'll need to remember to stay on top of college planning:

September

• Meet with your guidance counselor to discuss your choice of colleges.
• Start a scholarship search.  Look online and tap your guidance counselor to get help with local scholarship options. Note all scholarship application deadlines on your master calendar.

October

• Decide which schools to which you'll apply. Make a note of all the application deadlines and put them on your master calendar.
• Secure recommendations from teachers, employers, or other adults. Give them at least a month to write their letter.
• Start thinking of topics and drafting outlines for college application essays. 

November

• Submit your college application information on time.
• Schedule campus visits and interviews.

December

• Keep an eye on scholarship deadlines and continue your scholarship search.

January

• File your FAFSA (Free Application for Federal Student Aid) as soon after January 1 as possible. File online at fafsa.ed.gov. 
• Attend a financial aid night to learn more about paying for college.

February

• Provide your counselor with the necessary mid-year grade forms, if your schools require them.
• Register for advanced placement tests.
• Complete scholarship applications.

March

• Watch for your Student Aid Report (it should arrive about four weeks after submitting your FAFSA).
• Check your mailbox! You should begin receiving your admissions decisions from colleges.

April

• Compare financial aid awards  from different schools and keep these in mind as you weigh your options.
• Look for additional funding if your financial aid package is not enough to cover your costs.
• Think about private student loans.
• Use Wells Fargo's online tools and calculators help plan.
• Make the final decision and notify your schools.

May

• Enjoy the last few weeks of high school, but remember to keep your grades up!
• Make sure your final transcripts are sent to the college you'll attend.

Summer

• Save money from your summer job and gradually buy things for school.
• Know your freshmen orientation dates.

Any other ideas to add to the senior year calendar?

Caroline

When it comes to your non-school expenses, who is paying them — you or your parents?

As you head off to college this fall, it might be a good idea to talk it over with your parents and make sure you're on the same page about which bills you'll pay and which bills they'll pay.

If you're just starting to take on some responsibility for your finances, it will be an eye-opener to learn just what it costs to keep you afloat. You may not have any idea about all the costs included in owning a car or renting an apartment. Your parents will definitely appreciate your asking about it!

Here are some of the biggies to think about:

• Cell phone : Are you still on your parents' plan or will you be getting your own plan? If you're on a "family plan" with your parents and siblings, take some time to look over the bill and maybe talk with a representative to make sure you've got the most cost-effective features. And think about the future: Will you be using more minutes/texting once you're away at school? Don't wait for a big bill to get things organized.
• Rent/utilities: Rent might be something you can pay on your own. But if your parents are shouldering your share, maybe you can afford to take on some of your utilities. Once you split these among your roommates, they usually aren't too bad. Plus it will be good training for the future — you might start thinking of ways to save energy  if you're facing the bill each month.
• Car expenses: Even if your car is paid for, there are still plenty of expenses that go along with it outside of gas — insurance for one. If your parents are paying your car insurance, you can help them out by getting good grades. Insurance companies sometimes give a "good student" discount , so have your parents look into it. Don't forget about oil changes, registration fees and general repairs. Even if you can't afford to help pay for all these things, you should know what they cost — someday all these expenses will be yours.
• Personal items/expenses (food, clothing, haircuts): Again, if you're just starting to pick up some of your own expenses, this might be a good place to start. Most of your personal expenses are things you can control, so it will help you learn to discipline your spending — you'll be more inclined to shop for bargains  or eat within your meal plan when the cost is coming out of your own pocket.

When it comes to your college expenses, what things are you paying for?

Caroline

Yeah, yeah, your bags, boxes and laundry baskets are packed. You've got all the goods for college : a couch, TV, dorm fridge, new towels, laptop. What else could you possibly need?

There are a few more things to bring to college with you, but don't worry, they won't take up any more room in your parents' already loaded-down minivan! This is a more non-traditional packing list, but vital stuff to have with you as you embark on your new adventure:

1. An open mind. You're going to meet all kinds of people and study all kinds of subjects in college. Be ready and willing to listen to new people and new ideas.
2. Consideration for others. This is especially important if you've never had to share your room, your clothes or your car. Remember that your roommate  may not appreciate your taste in music or housekeeping habits. Try to respect that and come to an agreement.
3. Curiosity. A healthy curiosity about life will take you far in college. Pay attention, ask questions and get involved. You'll be amazed at what you learn when you actively look for the opportunity.
4. The ability to speak up. You'll have to be your own advocate in college, so if you're not used to speaking up, now's the time to start practicing. If your roommate didn't remember to bring #2 on this list, you'll probably have to say something. If your professor grades  on class participation, you'll have to be ready to jump in the discussion. If you're struggling with a class, or need some academic advice, your advisor isn't going to come looking for you — you'll have to speak up.
5. A sense of responsibility. Going to class, managing your money, doing your laundry  — it's up to you now. As you head off to school, know that it's your job to tackle it.

For those of you already in college, anything else the freshmen need to pack?