College education is not only important for your child’s personal growth but also in terms of the development of their earning potential and financial stability. Financial planning is an important part when planning for college education as it is expensive. There might be instances where financial burdens will pose difficulties in funding your child’s education, which makes it essential to start saving from an early age to avert the expenses later on. Here, we will cover the various ways in which you can start saving for the college expenses of your child from a very young age.
1. Making regular savings a habit
Regular savings will help you to build a fund for your child’s college education, and it is best to start with small savings. You can frequently save a portion of the paychecks you receive, and this will make it easier for you to set aside funds. Another good savings option is to change your lifestyle and curtail your spending habits in accordance with the amount you want to save.
2. Insurance certificates and money market instruments
Life insurance policies are a great way to build your assets and start saving for college. There are also other state-sponsored insurance policies targeted at your child’s education, which can be used to save money for their college education. You can also save money by investing wisely in mutual fund schemes, but exercise caution in choosing the plans as some of them are quite volatile. Take advice from a financial planner on the many ways you can invest in mutual funds to save for your child’s college education.
3. Try to get a scholarship
If your child is meritorious, you can apply for numerous scholarships available at different universities. These will not only take care of your child’s education but will also include boarding charges and tuition fees, among others. Scholarships can also be utilized for accelerating the process of paying for home tuition for your child. Many scholarships don’t even require you to have high school academic qualifications, so you can apply early for these merit-based programs.
4. Invest in college savings funds
Numerous savings methods are especially targeted toward funding your child’s college education.
Coverdell Education Savings Accounts (ESA) is another tax-advantaged way to raise funds for college education. The flip side of this account is that you have to fall in a certain income bracket to qualify for it. These funds are free from federal taxes and enjoy tax-free benefits like their 529 counterparts.
Individual Retirement Accounts or IRAs are yet another tax-saving option for funding your child’s college education.
College education is indeed expensive, but you can follow these steps to save up and provide the necessary funds to your child for their college. It is also possible for students to save on their own by taking up part-time jobs.