Saving for your children’s education is an important part of parenthood that many of us tend to put off. College degrees are becoming increasingly more expensive, so it’s important to start saving as soon as you can. There are a lot of options out there on how to save for your child’s future. Here are a few steps you can take to prepare for your kid’s future education and make the most out of the money you put in.
Open a High Yield Savings Account
A savings account is a safe way to start saving money for your child’s future education. They are secured by the Federal Deposit Insurance Corporation so you will still have your money even if something happens to the bank you stored it in. A savings account earns you interest. While it’s not a whole lot of interest, it will add up as you’re able to keep that money in the account.
Start a 529 College Plan
A 529 plan is a way to save for college that helps with tax and tuition. Somewhat working like a Roth IRA, you can invest your post-tax money into the account and that money will be invested. When you are ready to take the money out you won’t owe any extra taxes on that money.
Another type of 529 plan is a prepaid tuition plan. This is where instead of the money being invested, where you choose to buy into the cost of a college tuition. This form of 529 does not invest the money put in, so odds are it won’t add up to be enough to fully pay for your Childs tuition.
Start an Education Savings Account (ESA)
This is a similar way to save to the 529 plan, with the biggest difference being you need to be at a certain income level to qualify. An ESA lets you save $2,000 post-tax a year per child. if you were to do this from your child’s birth you would have invested $36,000 by the time you are ready to take it out, and can expect a decent amount of growth in that account from the money being invested.
Start Trading in the Stock Market
A more proactive method of planning for your children’s future education is for you to get into stock trading yourself. Learning how to trade stocks can help you create a nice nest egg to pay off college tuition. When you are making the right moves and building a solid portfolio over time you can expect to see great results.
All of these methods are great ways to plan for your children’s future education. The longer you wait to get started, the further you are from building a nice nest egg for them to get the education you want for them. The sooner the better when it comes to taking any or all of these tips into consideration, and the better chance you have of seeing your children get the education they deserve.