Saving for college tuition is a great goal. But it’s probably only one financial goal on your list. Unfortunately, your mortgage, credit card debt, student loans, retirement and other finances all come before saving for your child’s educational future. But that doesn’t mean you don’t have options. We’ve put together a few frugal family options to help you start saving for your children’s future.
Start early
While it might be hard, especially when your kids are young, starting a college fund early in their life will make the process easier. Even small amounts go a long way in the big picture. In fact, you might be surprised by how much you can save over 18 years.
Use your resources
There are so many options available to parents when it comes to saving for college. From ESA options to Roth IRAs, using resources that help you grow your investments are a great idea, especially for those that can’t invest large amounts.
ESA (Education Savings Account)
ESAs allow you to contribute $2,000 after tax each year toward your child’s future education. Over time, that amount grows tax-free. There are a variety of investment options, and when the time comes to pay for education expenses, there won’t be a penalty for withdrawal.
529 Plan
As one of the most popular educational savings options available, these plans are investment accounts that allow for tax-free growth and penalty-free withdrawals on qualifying education expenses. You can contribute more per year than an ESA as well as choose the best investment options for your family.
Roth IRA
While this is usually a popular retirement savings tool, it can also be used as a college savings option. There’s a wide range of investment options that can help grow your contributions over time. Plus, one of the great things about a Roth IRA is that money can be withdrawn at any time for any reason. So, if your kids decide against college, they (or you) can still use the funds without penalty.
Collaborate with your kids
Savings for college doesn’t all fall on the parents. Get your kids involved. Not only does it help teach responsibility, but it also helps them understand the importance of their future. Being open with your kids about their educational future and the finances around it will allow them more control over their studies now. They can work toward academic and athletic scholarships, research grants and other financial aid options and have a realistic view of alternatives, like community college before major universities.
Get creative
Did you know that you aren’t the only one who can contribute to your child’s collegiate future? In fact, anyone in their lives can help. Here’s how. Rather than asking for gifts on holidays and birthdays, ask friends and family to contribute to their college fund. Or if your child is getting gifts from others, decrease the amount you buy and put the leftover amount in their savings account. While it might not be as fun to get fewer gifts as a five-year-old, the eighteen-year-old college student will thank you later.
Getting started with college savings can be difficult, especially when your debt has gotten out of control. If your current debt situation has you concerned, call one of our certified credit counselors today at 800-500-6489 to learn how CreditGUARD may be able to help you save through credit counseling and debt management.
Want more money-saving tips and tricks? Follow our Frugal Family series to boost your budget strategy.