The Best College Saving Tips for Parents
It’s never too early to start saving for college, even if your little bundle of joy was born last week. It is no secret college expenses are steep and continue to rise yearly. Even with scholarships, college costs are astronomical. Whether your child is an infant or teenager, saving for college can be stressful.
Many parents don’t know how much to save each month or year towards their child’s education. In 2018, 7 out of 10 parents, surveyed in a Fidelity study, said they are currently saving for college. However, only 29 percent of parents think they can cover the entire cost of college.
As a financial strategy and planning company, we help our clients with wealth management. To save for college, you need a long-term plan, and you must be dedicated to staying the course of the plan. A long-term strategy will help you figure out how to plan for college. A plan allows you to see where you are now and think about where you will be in the future.
At Montoya Financial Strategies, we put together a profile for every customer that considers assets, debts, tax considerations, your feelings about risk, and how much time you must reach your financial goals. Then, we apply that to strategic planning that can help you potentially grow your money in a suitable way.
How to Start Saving for College
For this article, we wanted to share with you some tips on how to start saving for college.
- Use savings bonds. Ask relatives or friends to gift your child a savings bond instead of toys. Savings bonds pay out interest over time, so the gift will be worth more than the original amount.
- Opt for prepaid tuition. You can pay for today’s rate, so by the time your child attends the school you will not have to pay additional funds. This is a good option if you can pay the prepaid tuition with cash.
- Get a 529 plan. With a 529 plan, you pay current tuition costs when your child begins at college. These plans cut down on current taxable income. You can withdraw money tax-free. These plans can be used for education expenses at accredited colleges, universities, trade schools, vocational schools, and graduate school.
- Think of your college savings plan as a monthly bill. You must pay it every month.
- Get an ESA. An ESA is a Coverdell Education Savings Account. It has a tax-free status. As parents, you can save up to $2,000 for any beneficiary under 18 in an ESA every year.
- Ask your child, once they get a job, to start putting some money aside to help pay for their college expenses. Their money could go towards supplies, food, books, gas, and other items. If your child helps with some expenses, they will appreciate their education more and learn about responsibility earlier on.
Looking for a College Financial Planner?
Saving for college isn’t easy, especially if you have multiple children, are trying to save for retirement, and live comfortably day to day. The process can be made easier if you work with professionals to help you come up with a plan. According to a Fidelity survey, 64 percent of families working with a financial advisor felt closer to their goals.
Try to start saving for college as earlier as you can. The earlier you start, the better prepared you will be.
At Montoya Financial Strategies, we want to help you save for college. Our financial advisors will sit down with you and help you understand all ways you can start planning and saving. We work with your income, expenses, needs, and wants and figure out the best custom savings plan for you.