Starting With the Right Plan With College Savings for Your Child
Do you feel that it takes so much to put a child through college today that college prices have nowhere to head but down in the future? How wrong you would be if you thought that.
In 10 years, the average public university course will cost slightly over $100,000, and private university will cost a cool (not!) quarter million dollars.
About the easiest rule you have to help you save for your child's college is to start the process as early on as possible to give you plenty of time to build up a large enough fund.
Still, there is no one single saving method out there that will work the best for everyone.
It all depends on your needs as you take them into account: how old your child is, your tax bracket, how much financial aid you can expect for your child, and how comfortable you are not having too much control over your investments.
The first thing you need to do is figure out how much you need to save; the younger your child is, the less you can expect to save in capital, and the more you can expect your investment returns to make up for the difference.
Once you're sure that you have a figure in mind, the next step of course is to look up all the college savings plans and compare them.
Let's go over a few of the top college savings plans and find out how you can choose between them.
The 529 plan is a college investment account that is sponsored by the state.
As your money grows, you don't get taxed for it, and it's easy to borrow across plans for your children, depending on where the money is best applied.
The Coverdell education savings account has the same tax benefits as the 529 plan.
You can put in $2000 a year, and it's tax-free when you withdraw it for your child's education.
However, starting 2011, it is possible that you won't be allowed to contribute any more than $500 a year.
A great way to keep college tuition locked-in at the current rate would be to choose a prepaid tuition plan.
It's a great way to invest with as little risk as possible; but they only allow you to do this for the tuition and not for your child's room and board at college.
You will have to save in other ways for it.
If you have ever served in the military, there are scholarships on offer for your dependents too.
You have to remember that you need to start saving for your kid's college almost before she is born.
Getting enough college savings together takes that long.
Remember to keep checking for the latest information on college savings plans.
You never know when a better plan might come along.
In 10 years, the average public university course will cost slightly over $100,000, and private university will cost a cool (not!) quarter million dollars.
About the easiest rule you have to help you save for your child's college is to start the process as early on as possible to give you plenty of time to build up a large enough fund.
Still, there is no one single saving method out there that will work the best for everyone.
It all depends on your needs as you take them into account: how old your child is, your tax bracket, how much financial aid you can expect for your child, and how comfortable you are not having too much control over your investments.
The first thing you need to do is figure out how much you need to save; the younger your child is, the less you can expect to save in capital, and the more you can expect your investment returns to make up for the difference.
Once you're sure that you have a figure in mind, the next step of course is to look up all the college savings plans and compare them.
Let's go over a few of the top college savings plans and find out how you can choose between them.
The 529 plan is a college investment account that is sponsored by the state.
As your money grows, you don't get taxed for it, and it's easy to borrow across plans for your children, depending on where the money is best applied.
The Coverdell education savings account has the same tax benefits as the 529 plan.
You can put in $2000 a year, and it's tax-free when you withdraw it for your child's education.
However, starting 2011, it is possible that you won't be allowed to contribute any more than $500 a year.
A great way to keep college tuition locked-in at the current rate would be to choose a prepaid tuition plan.
It's a great way to invest with as little risk as possible; but they only allow you to do this for the tuition and not for your child's room and board at college.
You will have to save in other ways for it.
If you have ever served in the military, there are scholarships on offer for your dependents too.
You have to remember that you need to start saving for your kid's college almost before she is born.
Getting enough college savings together takes that long.
Remember to keep checking for the latest information on college savings plans.
You never know when a better plan might come along.
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