Saving for College
College education is a best investment for a student’s future, and education can pay off in the form of future earnings. Universally, 97% of the families believe that the best way to prepare for a better future is through a good education. The 90% of families in US expect their kids to earn a Bachelors Degree based on a recent report by Sallie Mae. The families that plan and save for college education improve the chance for their kids to attend and earn a degree.
The following are the tips to start saving for college education:
- Start a savings account under your child’s name as soon as you receive his or her social security number. Contribute Monthly.
- 529 savings plans are a good way to save for college, as they also offer great tax breaks. There are two types of 529 plans, prepaid and savings plan. The prepaid savings plan allow you to purchase tuition credits at today's rates to be used in the future. The performance is based upon tuition inflation. The savings plan's growth is based upon market performance of the underlying investments, which typically consist of mutual funds. Check with your state to determine which plan is offered.
- Start an investment account with a stock brokerage. You will need a minimum of $500 to open an account with a discount broker. Buy long-term investments such as ETFs, Stocks, and Mutual Funds. Invest Regularly. If you start a savings account and invest in stocks, an average of $100 dollars a month, in 18 years you may have more than $50,000 assuming a rate of return around 10% a year.
- If you own a home - then may be pay it off sooner than you can. That will save you enough to invest in other properties. The home equity from either your primary home or the investment properties as well as any rental income may be a good substitute to other college saving plans.
- You can rent a room in your house or AirBNB it to generate extra income..
- If you do not have a high income to save or invest, then you should start learning about Financial Aid and Scholarships. More you learn while your child is growing better you can plan. In any case, do not let money become a barrier to your child's college education because financial aid plans can pay for free if you have a low income and you qualify.
Start saving now for a better future.