You can use these expert tips to help your child save for college and achieve a brighter future.
Obtaining a degree can assist your child in reaching their goals and raise their income. However, the price of education doesn’t come cheap. College expenses are increasing faster than US inflation.
Preparing for the fees that come with education can give you a head start. Students will need to learn to save. Here are 7 simple tips to help your child save for college.
1. Encourage Your Child to Work
One of the simplest ways your child can save is to obtain a job. Not only does working help them get money, but it teaches them the work ethic they’ll need to survive in this world. You can assist by helping them look for part-time or Summer jobs that work well with students.
Juggling work and education can be difficult. It’s crucial that you assist your child in finding a job that can accommodate their schedule without overworking them. Your support can make all the difference in their life and academic success.
2. Recommend Your Child Puts Paychecks Into a Savings Account
Once your child has found a suitable job, the best thing they can do is place their paychecks into a savings account. This will help them save most of their money instead of spending it on useless items or the latest gadgets. When their education is on the line, this strategy is one of the best choices.
There are different types of savings accounts that can be useful to a student or parent. If they haven’t already, they can start by opening a bank account. This will come in handy not only for saving but for their independence.
3. Apply for Scholarships and Grants
Many students can lower the cost of college by applying for scholarships and grants. These can offer your child a way to pay for some of the fees without falling into debt. Unlike student loans, these typically don’t need to be paid back.
There are numerous scholarships and grants available to students. The best way to achieve as many as possible would be to maintain good grades and participate in school activities. This can put your child at the top of the list, along with heightening their chance of getting into the college they desire.
4. Open a UTMA or UGMA
A Uniform Transform/Gift to Minors Act is an account that’s made in your child’s name but you control it. For UTMA, you’ll manage their account until they’re 21. A UGMA account can be turned over at 18.
These college funds can be used for college expenses or anything else your child wants to use it for. The contributor will receive tax advantages. One downfall is that the contributor can’t be changed once they’ve been selected.
5. Place 15% From Your Own Paychecks Into an Education IRA
By saving 15% of your own paychecks into an IRA, you’re doing your part in helping your child pay for college expenses. This account is tax-free and can be withdrawn tax-free until the entire principal balance is taken.
An IRA isn’t only for students. You should set up a Roth IRA through your work or other opportunities. This will ensure that you have your own savings to fall back on while assisting your child with saving for college.
6. Save $2,000 Per Year in an Education Savings Account (ESA)
An ESA will allow you the chance to save up to $2,000 per year for each child. You can start saving when they’re only a baby to get an additional $36,000 towards college by the time they turn 18. This amount will grow tax-free at a higher interest rate than regular savings accounts.
An ESA can be beneficial, but there are a few things you should know first. There’s an income requirement you must meet to qualify for this education savings account. The other thing is that the amount saved must be used by the beneficiary before they turn.