A college education is what can be the start of a successful career for your child. The educational process will help your son or daughter gain the necessary knowledge, social skills, and experience to overcome difficulties. But the problem is that education is associated with high spending. So this is why you should start saving money now so your child can get a degree and start a successful career. But how to start saving money for your child’s college education? Here are some tips that might be helpful to you.
Open a 529 Plan
Here’s the first savings plan you should know about. Let’s say you want to deduct your contributions from your state income tax. Then, thanks to government support, you don’t have to worry about taxes. Instead, use your savings for educational purposes. Besides, you don’t need more than a couple of tens of dollars to open an account. Now you will be able to top up your deposit to receive the full amount when your child enters college.
Put Money Into Eligible Savings Bonds
The government guarantees savings bonds are another good option for you. That is why you can choose this type of investment to save money for your child. The only caveat is that the interest you’ll earn is pretty low. As a rule, this is less than one percent of the invested amount. But at least you won’t risk it and can save money for your child.
Try a Coverdell Education Savings Account
It is a tax-deferred trust account that can be used to pay for college. In other words, this account is perfect for paying for college education, food, and even a dorm room until your child reaches the age of 30. Earnings accumulate tax-free, so you have nothing to worry about as long as you do not make any non-educational spending.
Put Money Into a Custodial Account
UGMAs, or Uniform Gift to Minors Act, is a savings account that will allow you to top up your deposit every month. Your child will be able to dispose of funds for educational purposes when they come of age. This option is most acceptable for those who are worried about the misappropriation of money.
Invest in Mutual Funds
Mutual funds are another option to help you make money. Buy stocks of companies, play on fluctuations in currency rates, or buy digital coins for further resale. Your investment allows you to have the freedom to act and choose any way you want to achieve your goal. The only caveat is that you must take risks and gain the required knowledge before creating an investment portfolio.
Take Out a Permanent Life Insurance Policy
And here is another original option to help your child pay for a college education. This life insurance policy has standard conditions under which your heirs will receive money in the event of your death. But some of the payments will go to the tax-deferred savings account. Luckily, you don’t have to die for your kids to spend that part of the money. In addition, you can cash out this money at any time and spend it on any purchases or purposes.
How Much to Save for College?
So, this is a very good question since many families start collecting money without even understanding their final amount. Typically, you will need about 10 thousand dollars if you count on in-state college tuition. A private college will cost you about thirty-five thousand dollars a year. But this is only an average figure since some colleges’ tuition costs can reach eighty thousand dollars a year or even more.
So this is why you should think about how much money you are willing to save each month and whether you need to consider student loans as a way to pay for your education. Imagine that you are a student yourself and do not even know how to start an essay on climate change. Are you ready to start saving money for your unborn child every month? Solve problems with your assignments and learn all the basic aspects of saving money.
All of the above options may be interesting for the average family. However, the final choice does not matter since it depends only on how much money you can save for your child. So, start controlling your expenses or starting a business that will help you raise the needed money so that your child gets a good college degree.