How to Save for Your Child’s Education

If you want your child to have a college education, you should start saving now. There is really no substitute for having a savings plan in place as early as possible. Of course, it won’t be easy. You have all the monthly bills to think about, and those have to be taken care of first, but your child’s future is just as important. Here are a few tips on how to save for your child’s education.

Start Now

Don’t put it off. Saving for your child’s college education is important, and you shouldn’t delay in creating a savings plan. It’s never too early.

It used to be possible to get a decent paying job with nothing more than a high school diploma, but those days are most likely gone forever. In today’s economy, there are a vast number of people who are underemployed, and that probably won’t change anytime soon. It’s vital for your child to be prepared for the future, and that means entering the workforce with as much education as possible. Unfortunately, along with the downturn in the economy, the price of a college education is on the rise. That means by the time your child reaches college age, the cost of their education will be more than it is now. If you begin saving now, even it’s just a few bucks a week, the money in that account will grow and when the time comes, it will put a big dent in your child’s college costs.

Investment Plans

A simple savings account is a good way to start, but if you hope to build enough funds to put your child through college, you will need an investment plan. Investing in stocks or mutual funds could add not only to your own retirement fund, but to your child’s college fund as well. A financial planner could be helpful in laying out an investment plan that will allow you to set aside money for your child’s education. There are ways to invest that carry a low risk but can eventually grow and make the investments worthwhile. The less money you or your child has to borrow for their college education the less will have to be paid back--not to mention the interest you’ll be saving.

529 Plans

One of the best ways to save is to invest in a 529 savings plan and make your money work for you. A 529 plan is an educational savings plan that is available through an institution of higher education or through individual states. The plan has the advantage of offering tax breaks. It would be a good idea to talk to a tax attorney or your accountant about some of the advantages of a 529 savings plan. They may also be able to suggest other savings plans, such as a pre-paid college tuition plan or a Uniform Gift to Minors Account (UGMA.)

Coverdell Education Savings Account

A Coverdell Education Savings Account (CESA) is another option for saving money for your child’s college education. Because of the way this plan is set up, you can use money from this account for your child’s elementary and secondary school years as well as their college education. There are a couple of major caveats to this plan, however. Funds in a CESA account are counted as assets when your child applies for financial aid, and the money is considered to be the child’s asset. If you don’t put enough money into the account the fees for managing it could be more than the interest that’s accrued.

Use Your IRA

A dedicated account to be used as a college fund is a tried and true method of setting aside money for your child’s education, but another way is to simply put as much as you can into an IRA. Although the money in an IRA is ostensibly to be used for your retirement, it can also be used to pay for your child’s college education. Normally you would have to pay a stiff penalty if you withdraw funds prematurely, but if the money is used for education expenses--and you will be required to prove they are--then the penalty will be waived.

Guest post from Taylor Harris. Taylor writes about online schools for BestOnlineColleges.com.

I am Susan Hannan from Exams Key; it gives 100% Apple 9L0-517 exams. Let’s take benefit of Isaca CISA Exams material efficiently and get guaranteed success. Check out free demo of all certifications Exam. 

Share |