5 Tips on How to Prepare For Your Kids’ College Education
Many kids only start thinking about college education when they reach high school. As for parents, it is a different story. College education costs are not going to get lower when your kids grow up. In fact, the costs increase as the inflation goes up. Thus, it is better to start early for you as a parent to start planning for your kids’ college education fund even when they are still babies.
The problem is that many parents have no clue about how to save money for their kids’ college education. These tips can give you a head start in the process.
- Research on the various college saving plans. Currently, in the market there are so many different types of college saving plans that offer different advantages. Study them and select the best one that suits your requirements. These plans offer attractive tax benefits which you can ask a financial advisor to help you if you do not understand how it works.
- Choose a prepaid college tuition plan instead. These plans give you the option to lock in the current college tuition costs which you do not have to deal with the increasing cost later. Furthermore, you do not have to select any college first at this stage. As the plans are managed by the states, the student is only allowed to choose any public college within that state which his tuition plan indicates. However, if he wants to go another college of a different state or private college, he has to pay more.
- Start early. When your kid is still a baby, it is the best time to get started. This allows you to put money into the children college saving fund every month but a lesser amount compared to parents whose children are in grade school and they have to put in a bigger amount to save for the kids. You have a head start and by the time your kid is ready for college, you have a healthy college fund for him or her.
- Put regular savings into your kids’ college education fund. Every month, you can put aside a fixed amount of money from your paycheck to your kid’s college education fund which you set up for them. When you get a bonus or money incentives, you should put some of them into that saving accounts. Bear in mind to keep within the annual contribution limit to avoid any unnecessary penalties.