The topic of saving for college for kids is a hot one that most people seem to ignore and place on the backburner. Don’t let that be you. Instead, make saving for your kids a priority. You have to have a plan however. Before you create a savings goal, you need to think about your various options and write down your financial plan. Let’s dive into various ways you can save for college for kids.
How to Open a 529 College Savings Plan
By far, the best way to save for college for kids is through a 529 college savings plan. 529 plans are state sponsored programs and provide extra flexibility for how families choose to use the funds. Do a quick search for 529 plans in your state and you will be well on your way towards opening one.
Since 529 college savings plans are tax shelters, you will be able to protect yourself from Uncle Sam and avoid any taxation. Once you get approved through your state, you can then select any mutual funds, index funds or any other investment vehicle to invest your 529 funds in. Your savings will grow tax free and will stay tax free as long as you use your funds for college expenses. 529 college savings plans are a wonderful strategy for saving for college for kids.
Make a Birthday Gift Contribution
This is one of the greatest gifts any parent can give their children. Instead of buying the latest tech toy or video game, why not give the gift of education? Aside from the money you’re regularly putting away into your 529 plan, contribute a large amount for a birthday. While not the most popular birthday present, this act of responsibility will not only teach your child about financial stewardship, but it will instill a respect for higher education. You never know, this could spark your child to start saving for their own tuition!
You can even encourage aunts, uncles, and grandparents to contribute to the 529 plan. Since anyone can contribute to the plan, make it a family tradition to save for future college. This could be a great bonding activity and there would be a great amount of satisfaction on the family’s side when the kids graduate from college. Make it a team effort and place a high importance on education.
Keep up With the Consistency
Saving for future college tuition will only be successful if you make it a habit to save and save often. You will have to stay consistent and set aside money each month. One tip that is recommended is to automatically invest a portion of your paycheck into a 529 plan. You can set it to automatically contribute money to your 529 account. You won’t even think about the money and you will stay consistent with saving.
What’s your plan for saving for college?
After reading this article, you really have no excuse to not save for future educational expenses! Through a combination of a 529 plan and consistent saving, you can easily cover any future college related expense. Don’t find yourself going broke when your kids enter college. Start now and start saving!
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