How to Get Started with a College Savings Plan

It’s never too early to put away money for your child’s education. Consider these options, before choosing a plan, you will need a small amount of money to start with and a computer.

Step 1 – Start saving right now even if your child is an infant the more time you have the more money you can save and the more interest you’ll learn.

Step 2 – Sign up for a state-sponsored 529 savings plan all the money you put in earns interest tax-free and there are no fees or taxes when you withdraw it as long as you use it for school. Each state has different rates and rules type 529 and a state name to find information. You don’t have to choose your own State’s plan and you don’t have to stay with one claim you just have to limit transfers to once every 12 months.

Step 3 – If you open any other accounts for your child’s education, make sure you put the accounts in your name. This will make it easier for your child to qualify for federal financial aid because the financial aid application assumes only 5.6 percent of a parent owned account will be used to pay for college versus 20 percent of a student owned plan.

Step 4 – Register at you promise calm and you’ll get money for your college fund every time you buy something at specific retailers and restaurants. You can arrange for the rebates to be deposited into your 529 savings plan every quarter friends and relatives can open you promise accounts linked to your child’s 529.

Step 5 – Consider other plans like mutual funds that specialize in college tuition savings or an educational IRA just like a 529. These have more lenient tax rules than savings vehicles not earmarked for college consult a financial advisor to get started.

Step 6 – When investing for college, consider how many years you have to say. Stocks have the potential to provide higher profits but a risky bonds are safer but yield limited returns. If your child is more than 10 years from college invest slightly more heavily in stocks if your child is past third grade choose safer investments.

Step 7 – Tell loved ones about your child’s college and ask them to contribute whenever there’s a holiday birthday or special occasion.

Step 8 – College isn’t just your responsibility once your child is old enough for an allowance or a part-time job. Encourage them to add to their college fund. Research shows that children who contribute to their college fund tend to get better grades because they learn to take their education seriously at an early age.

Did you know over the past thirty years college tuition rates have risen between five to eight percent a year outpacing inflation?

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