Saving Money for College

Saving money for your kid’s college education may be a hard thing to do, but the promise of securing for them a better future is all the more reason to save so. You may be weighing your options, on saving money for your children’s education or saving money on your retirement. It doesn’t have to be this way. Even if you belong to a lower income bracket, you can save just enough to send your kids to the college of their dreams.

Saving Money for College: A Must-Do List

You CAN truly save money for your kids’ college by:

1. Saving Early

The earlier you start saving, the more time you will have for money to grow. If you try to save $100 a month for the next 18 years, you can come up with a hefty sum of $48,000 ( if the yearly rate of return is at 8% ).

2. Checking Your Stock Options

If you would like to protect your savings from the rising costs of tuition and inflation, you can try investing some of it on long-term stocks with higher yields. Make sure that you can switch these bonds into cash when the time calls for it.

3. Saving Just Enough

Your kid may grow up to be the brightest student in class and you don’t need to save for the full amount of what a 4-year course can cost. Just save enough, since there will be other funds available when the time comes. These can be in the form of federal, state, or private student loans and grants. Not only will you save on tuition fees, but your child will get to manage money as well.

4. Loving Your Tax Breaks

You may just be the lucky parent who can qualify for a federal tax credit, like those of the Hope Credit and Lifetime Learning Credit. If you earn a lot, you can still qualify for a deduction. For more info, please refer to Publication 970 of the IRS ( Internal Revenue Service ): http://www.irs.gov/publications/p970/index.html

5. Keeping Your Credit History Clean

There will come a time when your children will need someone to cosign a student loan for them, and having a good credit score makes their chances of getting that loan approved better than anyone who don’t. Pay your bills on time!

6. Plan a 529

This education savings plan was created to help families plan for their children’s future colleges. When each state has at least one 529 plan ready, there is no reason to delay. Yes, there’s more! You do get tax breaks, plus, you can start this plan no matter how much you earn. Your beneficiary’s age won’t matter much. Imagine a huge savings between $100,000 to $270,000 for each beneficiary. That’s a lot!

People save money for all types of reasons. This is a fact. It is always good to have a Plan B when Plan A fails. Saving money simply gives you more freedom and peace of mind. Just because someone has a very low income doesn’t mean he or she cannot truly save. Saving money for your children’s college is all about the willingness to find your financial literacy and searching for resources that not so many people are trying to look for. Save for the Rainy Days!

READINGS:

http://money.cnn.com/magazines/moneymag/money101/lesson11/

http://www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php

http://ptmoney.com/2009/06/17/529-plans-the-smart-way-to-save-for-college/

http://www.usnews.com/money/blogs/alpha-consumer/2009/2/4/the-real-reason-people-dont-save.html

http://www.irs.gov/publications/p970/index.html