One cannot afford to take the value of a college degree lightly in the modern world. For many people out there, a college degree is their only ticket to financial independence. Therefore, for most folk, a college education is the best gift you can give your children. However, the cost of annual college tuition, room, and board can quickly run into tens of thousands of dollars. Rather than saddle your children with piles of student loans, it is prudent for any parent to start saving for their children’s future as soon as possible.
With rising tuition costs, a parent should meet at least a third of the college expenses before the kids enroll. This will spare children the burden of starting their careers with a load of debt.
The Need for College Savings
Any parent or prospective parent has no doubt observed that they grow quite fast. One minute you are preparing them for kindergarten, and the next minute you are filling college applications. Without the advantage of foresight, one may soon meet seemingly insurmountable challenges regarding the educational needs of their children. However, with proper planning and insight into your child’s future educational needs, one can avoid the pitfall of poor planning. meeTruth is, you can open a college fund for your children whenever you want to.
That said, it is essential to note that the earlier you open this fund, the better for you and your child. To achieve this successfully, you should open an account as soon as they have a Social Security number.
Types of College Funds
As a parent, there are several ways to go about the business of saving funds for college. One should be careful when considering the options available to him for their children’s education. Such factors as the risks and charges involved and the advantages or potential disadvantages of the said savings plan should be considered at length. Checking accounts and savings accounts are a popular option. However, as any financial expert will have you know, there are certain advantages in using college funds to save your child’s college funds.
For one, the tax implications on college funds are less severe than in other types of saving mechanisms. The benefits of starting a college fund as soon as possible are apparent. By allowing your money to generate interest over a more extended period, one can significantly increase the principal amount. Additionally, your money is unlikely to generate significant interest when merely left in a savings account.
529 Plan Accounts
A 529 Plan is one of the surest ways to save for your children’s college education. This is a type of tax-advantaged savings account. Through this type of savings account, parents are encouraged to save for their children’s education. Usually, there is no income tax as long as the money is not withdrawn from the account. There are certain advantages to opening a 529 Plan account. As a parent, you can change the beneficiary of the account should the need arise.
Additionally, should you choose to change your plans and make investments instead, with a 529 Plan, you can do so with ease. All said, 529 Plan accounts are an attractive option for guardians and parents alike. However, it is necessary to remember that a 10% federal tax may be imposed should any withdrawal be made for non-education related expenses.
Planning for Success
To make any real progress, you need the advice of a capable financial adviser to help you navigate the available options. Find a Bank or Credit Union that can be a dedicated partner in the journey to secure your children’s future. Find a bank with pocket-friendly rates and keen advice, investing in your child’s education has never been this easy. In the journey towards making the most significant investment in your child’s life, you need a listening and caring partner with years of relevant experience.
As an example, one reputable financial institution, Centris Federal Credit Union has been serving the residents of La Vista and has established a strong reputation. Among other attractive offerings, Centris Federal Credit Union offers a free personal checking account in La Vista, NE. The dedicated personnel is always at hand to guide you through the dos and don’ts of setting up a college fund.
Use these financial tips to begin the journey to start investing in your child’s college fund now. There is no better time to start and your child will be so grateful knowing that they have a head start on paying for their education.
By Samantha Higgins
Samantha Higgins is a professional writer with a passion for research, observation, and innovation. She is nurturing a growing family of twin boys in Portland, Oregon with her husband. She loves kayaking and reading creative non-fiction.