Three Creative Ways to Save for Your Child’s Future
You knew, when you decided to start a family, that there would be expenses. More living space. Childcare. Extra tickets to the movies, and extra seats on the plane. And while you’ve figured out ways of handling your current expenditures, saving for your child’s future can seem daunting. College tuition costs are rising exponentially, and many parents would like to have a little bit saved away to help with the cost of wedding plans or down payments on a home.
- Look into brokerage accounts rather than savings accounts. Talk with your accountant about the possibility of putting money into a brokerage account for your child’s future. You can set aside a small amount of after tax income each month, or even biweekly, and have it deposited into your account. Brokerage accounts offer flexibility, and have the potential to deliver high yields on modest investments.
- Talk to your employer. If you started working with your current employer before you had kids, you may have overlooked a few items in your benefits package. Many employers offer family-friendly benefits to their employees. Some companies allow you to make direct deposits from your paycheck into a 529 college savings account for your child. Others may offer a small scholarship to college-bound daughters and sons of employees. These scholarships are often humble, but any amount is helpful when you’re saving for a sizeable college tuition.
- What does your state have to offer you? Check into the options your state has available for families looking to save money for their children’s educations. Your state may offer a 529 college savings account, which is a plan that allows families to use after tax money, and contribute it to an account that is specifically intended to cover tuition costs. This account will allow your money to grow, tax-free, and your investment will remain tax-free even as you are withdrawing it to pay for college. You can even ask grandparents and other close relatives to make UGifts through the organization UPromise to your 529 account instead of buying your children expensive toys they won’t use or will outgrow quickly. Bankrate has an article outlining what you need to know before opening a 529 college savings account.
Check to see if your state offers a prepaid tuition plan. This type of plan allows parents to purchase tuition at today’s college tuition rates, no matter how high these rates rise in the future. If you’ve been following the rapidly escalating costs of college tuition, this plan may seem particularly appealing to you.
You don’t have to drastically cut back on current expenses to save for your child’s future. Making small investments in consistent increments will have an impact if your utilize the resources at your disposal.