3 tips for saving for your kids’ college fund
TRANSCRIPT
3 Tips For Saving For Your
Kids’ College Fund
There’s a reason you often hear parents saying “They grow up so fast.” It can sometimes feel
like your child goes from a toddler to a college student in
the blink of an eye.
When you’re having a baby, the last thing you want to think
about is saving for your child’s college, but it truly is smartest
to save as early as possible.
Thanks to the phenomenon of compounding, in which your
turns earn more returns, your money can grow exponentially if
you start saving early. Try to give your money as much time
to grow as possible.
If you start saving for college before your child is born, you’ll
be able to save much more than if you wait 9 years. Here are a few tips for saving up for your
kid’s college.
Plan for retirement,
too
Before you start saving, make sure you’re taking your
retirement plans into account as well. Many experts feel that
equal if not greater importance should be placed on your
retirement plans.
Paying for college can be done through other options such as scholarships, grants and loan programs, but your options
without any retirement savings are limited. You can either
continue to work to get by on small social security payments.
If you put your kids through college without planning for
retirement, this could become a burden on them when your
retirement savings run out later. Planning for retirement doesn’t just help you. It can also save
your children financial strain in the future.
Choose the right
savings plan
When it comes to choosing a savings plan you have a few
options. In most states, there are 529 savings plans that come
with tax benefits. These benefits are especially helpful in states
that have an income tax.
If you won’t need access to your child’s college fund until you are
older than 59 and a half, then you can consider an IRA. This is
beneficial if you want higher interest rates than the average
529 or savings account.
If you’d prefer to use a standard savings account, you can set up
the amount in your child’s name, but there’s a catch. Having too much money in child’s name
could have a negative effect on his or her eligibility for financial
aid in the future.
Remember that the
investment is worth it.
College is getting more and more expensive, but it pays off. The U.S. Census Bureau states that education has a greater impact on earnings throughout a 40-
year career than any other other factor.
A study conducted by the Census Bureau examined the
relationship between education and earnings using data
collected monthly from 2006 to 2008. The study’s author
estimated that a person with a professional degree earns about
$72,000 more a year than a person with an eighth-grade
education.
Saving for your kid’s college is well worth it, because that
degree could help your child make more money in the future.
It’s crucial that you start saving for your childrens’ college as
early as possible. The earlier you start saving the more time your
savings will have to grow. Saving for college can have a huge impact not only on your child’s education but on your child’s life way down the line.