Thursday, August 18, 2011

Saving For Your Child’s' Future Education

It's easy to forget, or sometimes just put off, the long-term costs of having a child. We're often faced with the overwhelming day-to-day expenses of getting by and forget about things like education. Not saving for a child's college education isn't uncommon by any means, but a college education will become essential to find any job in the coming years. You might ask yourself where the money is going to come from after you're done paying all the bills and feeding a family, but there are ways to accomplish this without having to radically change your life.

Before you do anything else, you'll first need to figure out how much you'll need to save up. This is pretty tough considering that the rate of tuition increases greatly every year and can go up several thousand dollars for online college and universities. You can go to a page supported by CNN and you can factor in many of the costs you're likely to see when you child comes of age. With this you can factor in multiple children and many of the side expenses you child is likely to see. It's important to not let these figures scare you. College is expensive, but you have time to save.

Consider the options available to you before you start packing money away into an account. One option that has become a very popular avenue for parents is the 529 Savings Plan. This was devised as a strategy for parents to start saving early for college. It's available in every state and it's named after the same federal tax code that allows significant tax benefits. There are two different options with this plan: the prepaid tuition plan and the 529 savings plan. With both options, you'll be able to earn tax free interest with your investments and will cover anything education related. Check the program out to see which 529 option works best for you situation.

Another popular option is the Coverdell Education Savings Account (CESA), traditionally known as the Education IRA. This option allows parents to save up to two 2 thousand every year, which is completely tax free. One of the biggest benefits of this program is you can pay for elementary and secondary school tuition. One of the problems with this program is that they are considered holdings, and when you child applies for financial aid later on, they might not get very much because this money will be factored into their government financial aid award.

There are many other programs out there designed to help parents save for their child's future. You just have to do some research. You don't have to be wealthy to put money away for you child. Everyone wants the best for their child and investing in one of these programs is an investment in your child. Give your kid the best possible future and look at ways you can help them later on in life.