How to Create a College Trust Fund for My Kids


Many parents want their children to attend college, but rising tuition costs can make paying for college a daunting prospect. Like many other financial goals, the key to being able to pay for something you want in the future is to start saving years before. Creating a college fund for kids takes discipline, but it is not difficult to do and regular contributions will reap big rewards.

Things You'll Need

  • Computer with Internet access
  • Regular income
  • Parent and child's personal information
  • Investigate what type of financial vehicle you wish to use to save for your child's college education. State 529 plans are very popular as you can control the aggressiveness of the investment and they offer tax breaks, however there are a variety of other options.

  • Meet with a financial adviser who can give you an overview of the pros and cons of different types of college trust funds. This adviser can walk you through tax benefits, penalties, growth potential and and other important considerations.

  • Open an account in the child's name by sending an initial deposit to the group that will be managing the fund. The amount of money necessary to open such a trust fund will vary depending on the vehicle you choose. In all cases, the personal information of the parent and the child will be necessary to establish the account.

  • Decide how much to contribute to the fund each month. Financial advisers have tools that help you figure out how much college will cost when your child is grown and how much you need to save regularly to meet your goals.

  • Set up a direct deposit to be made into the college fund each month. Increase the amount as you are able. Consider investing more aggressively when your child is young and then moving into a less volatile investment strategy as college draws near.

  • Invite family members to contribute to the college trust fund as often as possible. Most funds do not have any restrictions regarding who can give money.

Tips & Warnings

  • Because of compound interest, how much you save each month is less important than starting to save for the child's college education as soon as possible.
  • Check out the Upromise website. This company offers creative and flexible ways to earn money for college by shopping, dining out and other daily activities.
  • All financial savings plans have tax consequences - make sure to talk to an expert about yours, so that you can keep the most amount of money in your wallet.


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