Nowadays, college is a considerable expense for most families. While the cost of college has undoubtedly gone up, it still remains a great investment for bolstering your child’s education and projected career path in the long run. Starting a college fund as early as possible is the best way to be prepared. So, we’ll go over the best ways to save for college.
Building up a college fund for kids doesn’t have to be complicated. With any of these tips, you’ll be able to save up for college tuition in no time at all.
Need some tips on budgeting? We have a great article on money-saving tips.
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Tips on How to Save Up for a College Fund
Budget
Budgeting is one of the most essential steps for building your college fund for kids. While it’s likely you’ve been told to budget, it’s much easier said than done. In fact, according to Credit.com, most Americans struggle to maintain a budget, or don’t have one at all. Luckily, there’s helpful software like MoneySpire that will help you seamlessly track your spending by category. By seeing your projected income and spending at a glance, you’ll be able to see just how much time you’ll need to realistically save for college.
Remember that there’s also no one right way to budget your spending. Different plans work best for different families and situations, so make sure you do extensive research before committing to the best strategy for you. Budgets are supposed to change over time as well, so don’t get discouraged if you constantly have to evaluate your original plan. The most important thing is that your spending time tracking your financial habits consistently.
Invest
Learning how to invest can be one of the best financial tools to build a college fund for kids. MasterClass has great classes where you can learn how to invest as well. Moreover, contrary to popular belief, investing doesn’t necessarily have to be a high-risk transaction to be profitable. You can easily invest in dependable mutual funds or ETFs that will put your money away and generate considerable dividends if let alone for an appropriate period of time. In addition, there are investing tools like the app Acorns, Robinhood, and TradeStation.
Model Financial Freedom
Whether it’s intentional or not, kids pick up on all of our habits, good in bad. That being said, it’s your duty as a parent to model financial freedom and independence. What this means, is that you should explain to your kids how to be financially literate in or out of college.
If you have debt, it’s important for you to work on paying that off as soon as possible. Monitor your credit reports through an official credit bureau like TransUnion, Tally, or FICO and track your progress. Whenever your kid is old enough to understand, explain the importance of avoiding debt and fostering a positive credit score. Like any other area of life, it’s your responsibility to make sure that your child knows the importance of managing finances properly.
Create a Savings Plan
Whether you’re creating a college fund for your baby or teen, you have to start saving somewhere. One of the best things you can do is cultivate a gradual savings plan that puts away a little money at a time proactively. Apps like U-Nest make it easy for you to set up a tax-free college savings account to build up a college fund for kids.
Using these tools early on in your child’s life will make it easier for you to save in the long run. It could be as simple as tucking away a couple of dollars per week, or per month. Whatever you decide to tuck away, make sure that it is consistent to get the best results possible.
Set Up a 529
Looking for an easy way to build a college fund for kids? You may consider looking into a 529 plan. A 529 plan is a college savings plan that pre-pays for tuition or sets aside tax-free money to use when your child goes off to college similar to a Roth IRA. CollegeBacker makes it easy for you to set up a 529 savings plan for your kids based on what you can contribute on a monthly basis. If your child ends up not going to college, your 529 money can be transferred to another beneficiary, or even to yourself for furthering your own education.
Paying for college education in the modern age is certainly easier said than done. Tuition can be extremely financially taxing, but with proper planning and care, your proactive college fund for kids will serve you and your family well.
After all, giving your child the opportunity to extend their education is vital to their success and your responsibility as a parent. By setting up your college fund for kids early on, you’ll be well on your way to making sure that your kid grows up successful and secure.
Need more finance tips? Check out our tips on how to stop spending money. If you need more money, be sure to check out our ways to make money quick article.
