How to Save College Money for Your Child
Parents often think that their offspring will eventually go to college, but many forget to make the financial investment needed to ensure their children can afford to attend. While you should fund your retirement before a child's college fund, getting started early with even a modest amount can reduce the loan amount your child will need upon entering school. In some states, you can even lock in today's public school tuition, compounding your and your child's savings.
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Instructions
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Open a savings account at your bank. There is a minimum deposit for most college savings plans and putting funds into a savings account until you reach that minimum will help you save.
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Set up an automatic transfer from your checking account or a direct deposit from your paycheck to the savings account. Transferring money into the account before you begin using it will keep you from forgetting to make the deposit.
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Convert the savings account to one of the many college savings plans available, such as a "529" plan. Not only will these help you save money for your child's college expenses, you will also get a tax deduction.
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Sign up for one of your state's savings plans, if you are sure your child will attend a public university in your state. If you are unsure whether your family will remain in the same state throughout your child's education, check for programs within the state to which you intend to move and ask about transferring your current savings to another education savings plan, if needed.
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Deposit a portion of any monetary gifts given to your child into the college savings account. When your child is very young, put the entire amount into the savings.
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Tips & Warnings
Speak with your tax adviser about the tax implications of college savings in your situation.
The earlier you begin saving money for your child's education, the more you will have when it comes time for college enrollment.
Saving for college before ensuring you have a retirement account can lead to financial stress as your children age. Speak with a financial adviser to discuss setting your savings up in a way that benefits your family in the long run.
