How to Save for Your Child’s College Fund
With each passing day, the cost of college tuition rises, necessitating the implementation of a good savings strategy. It’s critical to begin saving early so that you don’t have to worry about money when it’s time to send your children to college. You must save wisely in addition to making regular contributions to an account for your children’s college fund.
- To begin, create an account that is independent from all other accounts. If you don’t touch the cash in this account unless it’s an emergency, you’ll find yourself using it on a regular basis and it’ll become a habit.
- Don’t forget to put a specific amount into this account. Set up automatic payment methods so you don’t forget — even if the amount is small, the total amount will grow over time as interest accumulates. It’s not a good idea to break the habit. If you can only deposit $20, do so until you can deposit a larger amount, but don’t skip it.
- Money market accounts and certificates of deposit are better options than standard savings accounts. Interest rates are higher, and borrowing on the side is discouraged.
- Have you received money that you weren’t expecting? Put it in the appropriate account. You can deposit tax refund checks if they build to a reasonable amount over time.
- Assume you’ve finished paying off a loan for a car or a house, and you’d like to put some of the money toward your child’s education. You’ll be astonished at how quickly it adds up!
- Find out if you’re eligible for the government’s 529 college savings plan. Interest collected on the account is tax-deferred, and withdrawals are tax-free if you can show that they are used for educational reasons. This is a highly practical savings strategy.
- Check with your bosses to see if they have any rebate schemes that can help you save for college.
- Some credit cards provide a cash back program that you can take advantage of.
Scholarships can certainly assist, but you should be prepared to pay the entire tuition bill if necessary. It’s simpler to save for college if you have a rough sense of how much you’ll need. Compute this using the calculator.