Education

Saving for College

It’s never to early to start saving for college. Read our tips on ways to start.

When planning for your child’s future, you’ve probably thought about how they will pay for college tuition. True, they may not attend college or they may receive scholarships and of course, student loans are available. However, setting money aside for your child is one of the best things you can do for them now. Even a little bit here and there adds up by the time your child will need it.

A great place to start is to determine how much money you want to save up to. Do a little research and see what the current cost of tuition is at local colleges. Remember, the cost of tuition does go up so, you are most likely going to need more than that when it does come time for them to attend college. You can utilize a prepaid tuition plan, which will lock in today’s rates, but do your research because this can affect financial aid eligibility.

Once you set the benchmark for what you wish to save, determine how much you need to set aside to get there. Break it down by year, then by month, then by week and further if you wish. For example, if your child’s annual tuition is $20,000, a four-year degree will cost you $80,000. That means you need to save $4,444 a year for 18 years, $370 a month, or $93 a week to meet that goal. This is a large amount, but even if you do half of that, you can cover two years of their college education.

Saving money in a piggybank is fun, but not exactly the smartest choice. Look into bank and credit union accounts where you can keep those funds safe. This is also a great opportunity to earn money on those savings. There are specific accounts designed for saving for school such as 529 plans, but again, do your research because they come with certain restrictions such as you can only use those funds for school, even if your child decides not to pursue  higher education.

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