If you’re working hard at tackling a small mountain of student debt, you probably know just how important it is for your child’s future to have robust college savings. While it’s a good idea to start saving for your little one’s higher education sooner rather than later, it can prove to be super-challenging when you’re juggling, say, paying down debt or saving for your first home. The thing is, it’s completely possible. Here’s how to get started saving for your kid’s college fund.
Come up with a game plan
While your child might not be heading to college for, say, a solid 10 or 15 years, it’s a good idea to come up with a plan stat. That way, you can gauge how much you can reasonably save, and how much you’ll need to sock away to reach your goal. Will you be aiming to save up for 100% of the projected costs? Will it be more realistic for your child to go to a community college before transferring, or straight to a four-year college? What part of the bill will your child be responsible for, if any? Spend some time looking into multiple sources of funding, such as government grants and scholarships.
Brainstorm with your partner how much you would like to put in, and how much you can afford to save currently. If you have an account with us, create a Goal to start making some headway. Look at your past spending to see which areas you can trim.
Open a 529 account
You might be familiar with a 529 account, which is an education savings plan to help you save for your kid’s college. A great perk about opening a 529 account is that it grows tax-deferred, meaning you won’t have to pay taxes until you take money out. Plus, the funds won’t be touched until your child starts their college career, so you won’t be tempted to tap into it before you’re supposed to. There’s usually an option to automate into your savings account, and depending on the state you live in, the minimum amount required to opt into automating can be as low as $10 a month (read: roughly the cost of a sandwich or two green smoothies).
Intrigued? Before opening a 529 account, it’s helpful to keep in mind that there are two main types of 529 accounts: a prepaid tuition plan, in which the money you save can be used toward tuition at participating higher education institutions; and a college savings plan, which can be used toward education-related expenses. Knowing the difference between the two plans can help you make a well-informed choice.
Look into “sneaky savings”
These days, there are quite a few rebate and rewards programs out there that can be used to directly fund your child’s higher education (hooray for modern technology). They work the same way that loyalty and shopping rewards programs for earning miles for travel or cash back do. For instance, if you shop at certain retailers, you can rack up points that convert to cash for college.
Other options are credit cards where you can redeem points to put toward a college fund. You can take full advantage of these programs to boost your savings. Every little bit counts, so take advantage of these programs to bolster your child’s higher education fund.
Enlist the help of friends and family
Ask those near and dear to you to help chip in by offering a monetary gift in lieu of a present for your child. Of course, you don’t want your kid to be without awesome toys to play with during the holidays or on their birthday, but you can figure out a happy medium. For instance, maybe you can provide your child presents while some of your relatives can choose to give money toward their education. There are even 529 gift cards that can be deposited directly to a college fund.
While it may seem far off, before you know it your little one will be on their way to college. With some sound planning and taking steps toward saving sooner rather than later, you’ll be making serious headway on growing your kid’s higher education fund in no time.
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