If you are considering sending your child to college after high school, it is a good idea to explore ways to start saving now. Children grow up fast – so every cent that is put towards their future adds up over the years. Even if your daughter or son decides not to attend college, he or she can use the money for another career goal or life ambition. As a parent, caring for your kids’ physical needs is a must, but in today’s economy, providing them with financial support through college can be tough.
Did you know that the average cost for a year of college today is about $9,000? Unfortunately, that number is rising, so establishing an educational financial plan early can be beneficial. We at Baby Convenience, LLC, have come up with a few pieces of advice for how to save money for your kid’s college tuition. Our ChangePal travel diaper case provides your baby with a convenient solution for a hassle-free diaper change – but when they are older, you’ll need a convenient solution for their college tuition. That’s why we’ve gathered a list of tips to guide you.
Open up a Designated Savings Account
There are a variety of savings accounts that can be used to help you save for your child’s tuition. Here are some that can work in your favor:
- Roth IRA
- Prepaid College Tuition Plan
- Coverdell Education Savings Account
- UGMA Custodial Account
- UTMA Custodial Account
There’s Also the Qualified Tuition Program
The Qualified Tuition Program is a 529 college savings plan where you as the parent invest after-tax funds. The 529 plan is different in every state, but anyone can opt for it. In every state, the plan varies in annual fees, investment options and operating expenses. Conducting research on the plans will help you choose one that fits your preferences. The money from this account can be withdrawn tax-free to be used toward education costs. However, if your child decides that obtaining a degree is not their forte, the funds that are withdrawn will be subject to fees and tax penalties.
Collecting from Gifts
When your child is too young for picking out presents with gift cards and such, ask family members to offer cash gifts to be put towards your child’s future. You can take the cash gifts from family and friends and put them in an educational savings account. Special life milestones, such as a christening or birthday as the child grows older, can generate a good amount of cash gifts.
Budget Parental Spending
One way to save for your kid’s educational expenses is by budgeting a certain amount of money into a savings account every month. If you put $50 into a savings account every month from the day the baby is born until he or she is 17, it could generate about $20,000. If both parents have an income, that would be just $25 per parent a month. No matter what age your child is, this is an effective money-saving tactic.
Encourage Your Child to Pitch In
When your child grows older, and it is time to enter the workforce, encourage him or her to put part of their earnings away for education. This helps your son or daughter learn how to budget, as well as how to earn what they want in life.