We all want to give our children the best opportunities they can get, but that is not always easy in today’s world, nor is it simple. A college education is a necessity for career opportunities in many industries, but the rising cost of education is making it very hard for many students to get their credentials without accruing massive amounts of debt. No one knows where this trend will go in the next few years, which makes it ever more necessary to make sure that you’re prepared. Starting a college fund for your kids is a great way to keep them on track for success, but how can you start saving?
The best way to begin creating a college fund for your kids is to know what kind of savings account options are available to you. A standard savings account with your bank may seem like the easiest choice, but it is not always the most beneficial. If you hold your child’s college fund in a savings account, it will still be counted as part of your total estate. This will make it more difficult for your child to receive financial aid from the government when he or she starts college.
A much better option for storing your kids’ college funds is known as the 529. A 529 savings account allows you to save for your child’s future with no restrictions on age or income. You can start saving in a 529 any time you want, and qualified withdrawals from these funds can be made free from federal tax. Best of all, funds that are stored in an account like this will not be calculated as part of your personal savings, meaning that your kids will still be able to receive government benefits when they apply for financial aid in college.
One you know what kind of account you are going to use to store your children’s college funds, the question becomes that of how to actually start saving. If your budget is tight already, you might be wondering how you can ever manage to store money away for the future. There are many ways to free up your income and start saving. Look over your budget to see where you can reduce expenses. Even small things like going out to eat less often, or brewing your daily coffee at home, can help you save big in the long run. Start searching now for frivolous expenses that you can eliminate from your life. Cut down on your expenses and maximize your income to free up money that can go into a college fund.
You may have to cut a few luxuries from your life, and you may have to work a bit harder, but starting a college fund shouldn’t be too difficult. Even if your deposits into the fund are small, your savings will grow quicker than you expect if you make those deposits regularly. Find a reasonable amount of money that you can set aside from each paycheck, and make it your regular deposit. Your college fund will gradually grow, and you’ll be able to help your kids get the education they need to succeed.