Having a child may be a rewarding moment for many parents, but this also means taking on heavy financial responsibility. One of the most important long-term investments you can make for your children is saving up for their college education. Unfortunately, many college students who graduate carry a heavy student loan debt burden they carry with them. Without the adequate out-of-pocket funds to pay their way through school, they are forced to borrow thousands of dollars that can cripple their future, with more added on in interest. Because college has become increasingly expensive, it is wise to start saving for your child’s education from the moment they are born. Here is how you can effectively save some money starting today.
529 College Plan
The 529 college savings plan is offered by at least 30 states in the country and is one of the most popular methods of saving money for college. You invest money you earn after taxes, and withdraw it when you need to it pay for school-related expenses such as tuition, books or other needed supplies. You can start to invest small increments of money from when the child is small, and when the time comes to withdraw the funds, you can do just that. Be advised that you may be liable to pay some penalties if the child ends up not attending college.
Recommend Your Child Pitch In
Getting your child to help pay for college can be a great way to not only relieve some of the burdens you may have of putting away all the money but teaching them financial responsibility. If your child is able to find a summer job, devise a plan where they can devote a portion of their paycheck, no matter how big or small, towards their college funds. Every dollar counts.
Set Your Goals
You also need to understand how much you can afford to put away for your child’s college education. Calculate your monthly expenses and see how much you can afford to invest in the future. It is important to save early, but the amount you can invest can be impacted by more immediate concerns. If you fail to plan adequately, you could end up in a bigger financial hole than intended.