Saving for college isn't easy, but the earlier you start the better off you'll be. For example, if you save $60 a month for 17 years earning 8% per year, you will have over $25,000 by the time college begins! Taxes will reduce the amount of the portfolio.
There are several savings and investment strategies that can help you accrue money for college.
Below are some savings ideas that my help you better prepare for the task of funding your children's college educations.
- Assess your needs. In order to know how much to save, you need to estimate the future cost of tuition at public and private institutions.
- Save early and often. The sooner you begin to set aside funds for college, the less you will have to save. Allow your investments to grow along with your child.
- Set up a systematic savings plan. Try to save monthly or quarterly, just as you would if you were paying off a car or a mortgage.
- Keep a separate college account. The most popular are custodial accounts. These accounts ease the tax burden by allowing parents to shift some of their assets to the child at the child's lower tax rate.
- Involve the family. Children are more aware of family finances and accept responsibility when they are involved. It also becomes easier for you if the child is able to contribute to the fund.
Create an incentive program with your child. Offer to match the money the child makes to his own account. Teach him or her to work and help contribute to their fund - they will value their education more.