Raising children comes with a lot of expenses. Not only do you have to worry about food, clothing, extracurricular activities and more, but you also have to worry about some big ticket expenses later down the road. Weddings are a good example, but the most common – and hardest to save for – is a college fund. Take a look at these great ways to start saving up money for your child’s college expenses.
Put Money Away
You should be starting to save money early for a college fund. Many parents begin to invest in these funds before a child is even born, allowing many years for those savings to grow and accumulate interest. It’s also important to have a dedicated amount that goes into the savings every month, or even every paycheck. Make sure that when you’re creating your household budget, you set aside a chunk for college savings in particular. You don’t want to have to dip into your slush fund to help pay your child’s way through college.
Look For Scholarships
Even if you start saving early, it’s possible that you won’t get all the money you need to fund your child’s entire college experience. Prices differ wildly, after all. If your kid picks an out of state, private college to attend, they’ll be looking at a much bigger price tag than someone who decides to go to a 2 year college within the state. Look for all the financial help you can get. Ask your kid to apply for scholarships, and see what discounts or advantages they’re eligible for.
Check Out A 529 Plan
A 529 plan is a state-sponsored tax-advantaged plan that can boost your savings. Federal capital gains taxes do not apply to the investment earnings in these plans. Additionally, you’ll likely be able to avoid state government taxes as well, as long as you’re using the funds for educational expenses. Qualified education expenses can include textbooks, tuition, school-related fees, and even the cost of room and board. In some states, tax breaks are also offered.
Related to this, don’t stop putting money into your 529 plan once your child goes to college. You can continue to invest throughout their college stay. Just make sure you know your state laws regarding 529 plans.
Lean On Financial Aid
Sometimes, you’ll need to turn toward financial aid in order to get through college. The costs can be expensive even for people attending school in-state, and savings can be used up quickly. Don’t be afraid of looking into financial aid options if necessary. Make sure your children know that some of the burden will be on them, and don’t feel like you absolutely have to cover every single expense your child incurs during their college journeys. Keep in mind that they’re young and will have time to build their savings back up and pay off their debts. The closer you get to retirement age, the harder it will be for you to rebuild your savings.
Save With Insurance
Check in with your local insurance agency when you’re planning out your future college savings. Having good insurance plans can save you money in both the short and long term. Make sure you aren’t paying too much for your premiums. At the same time, you want to have the maximum amount of coverage to really make it worth your time and money if you do need to rely on insurance. Shop around a little, make comparisons, and find what works best for you.
College expenses can absolutely be intimidating, especially considering all the horror stories of huge debts these days. But if you play your cards right and save your money smartly, you can cut down on the amount of debt your kid will face – or even eliminate it entirely.