- Personal Finance»
- Paying for College
Saving Money for College
Trying to Save Money For Education?
No time is to early to start planning ahead for your child's college education. Whether they are in elementary school, diapers, or yet to be born, careful planning and goal setting is important to ensure a college opportunity for your little one. College funds allow parents to begin putting money away for school early, and keep their investment safe until it is time to send them off to school. Popular methods of saving for college expenses include; federal 529 savings plans, personal "college fund" savings accounts, or savings portfolios which can include stocks, bonds, and mutual funds.
Before deciding what kind of plan is right for you, you must determine a goal and a time line with which to achieve it. First, decide what kind of education you are saving for. Keep in mind that the average cost of a public college is around $16,000, while private universities are usually $37,000, and Ivy league schools are closer to $47,000. Knowing how much you need to save is the first step in determining the type of savings that you will need to accomplish by the time your child is ready for college.
What Is a 529 Savings Plan?
A 529 savings plan is usually a state-run educational savings plan that allows parents to start saving for the future cost of their kids education. Every state offers some kind of 529 plan, and these plans can be transferred to whatever state your child chooses to attend college. These plans differ depending on your specific state so the best way to find out exactly what your state offers is to do a little research. A general type of 529 plan is a savings plan, which can be run much like an IRA or 401K. There are also pre-paid plans that will let you cover all or part of the costs of an in-state or out-of-state school up until your child plans to begin attending.
How Do Personal Investment Portfolios Work?
Personal investment portfolios can consist of a collection of stocks, bonds, mutual funds, and savings accounts. These plans are highly personalized and many factors should be considered before deciding what is right for you. Some factors that will affect your investment strategy include; how much risk you are willing to take, the time-line which you are saving for, and how much involvement you want to have with your investments.
- How I Know What Is Right For Me?
If you plan on starting a personal investment portfolio to save for your child's college education, the best thing to do is consult an investment adviser to help you along the way. I realize that seeking out a financial consultant for the first time can be rather scary but trust me it is better to receive sound financial advice from the start, rather than having to make major adjustments down the road.
20 Questions to Ask Your Investment Adviser
Personal Savings Accounts: "College Funds"
Personal college funds are a very popular way to save for the future costs of college. The key to saving with a personal account is to start early on. Saving money for the future always sounds like a great idea, but the fact is that it will never become a reality unless you stop putting it off and start saving today. Here are some methods of contributing to a college fund that can be useful and effective.
- Start by Cutting Expenses: As you set out to save money for your child's college education, one thing you can do to help yourself is to cut some unnecessary expenses. This doesn't mean that you cant take that vacation to Hawaii you have been dreaming about. It just takes small adjustments like dining in, driving less, and taking better care of the things you have, to really make a big difference over the course of your investment time-line.
- Automatic Transfers: Another good way to steadily save money for college is to set up an automatic transfer from your paycheck or checking account into your college savings account. It really doesn't even have to be that much. Just a few bucks every week, or $50-100 once per month can really add up over time. If you are planning on saving up for your kid's college education with a personal savings plan this is going to be your most important method of saving.
- Start a Coin Jar: Yes a coin jar. As little as a few cents or dollars sounds, when added up over the course of a few years it can really be a lot. I would suggest putting all of your extra coins and change from the grocery store into a jar or piggy-bank, and at the end of every month or however long, put this money into your college savings account. This is a very simple way of saving serious money in the long run.
One of the hardest parts of saving for college is knowing where to begin. I hope that this article will help you decide which methods best fit your needs and goals. Remember that the most important thing with any of these methods is to start now. The earlier you begin saving, the easier the financial burden of sending your children to college will be.
Helping your kid find a job once graduated, now there is a challenge....