Yusra3
VIP Contributor
Few gifts can impact a child's future success like higher education. Given rising costs, starting a college fund as soon as possible makes meeting that large future expense more feasible. Here are the steps to establish a solid savings plan:
First, research different types of college savings plans - common options include the 529 plan, prepaid tuition plans, Coverdell ESAs, custodial accounts, and trusts. Weigh factors like investment choices, flexibility of use, contribution limits, fees, and tax advantages. Generally 529 plans offer the best combination.
Next, open the account with an initial lump sum contribution if possible, followed by regular automated deposits going forward - even modest amounts of $25 or $50 per month. Maximizing account contributions during the child's early years allows more time for investment earnings to compound tax-free over the next decade and a half.
Family and friends can also gift money into the college fund for birthdays and holidays to grow the account through grassroots support. Promote awareness and access to the fund.
With an early disciplined savings approach, covering a young child's future education becomes far more feasible. Consistent planning today allows celebrating big academic achievements 15+ years down the road!
First, research different types of college savings plans - common options include the 529 plan, prepaid tuition plans, Coverdell ESAs, custodial accounts, and trusts. Weigh factors like investment choices, flexibility of use, contribution limits, fees, and tax advantages. Generally 529 plans offer the best combination.
Next, open the account with an initial lump sum contribution if possible, followed by regular automated deposits going forward - even modest amounts of $25 or $50 per month. Maximizing account contributions during the child's early years allows more time for investment earnings to compound tax-free over the next decade and a half.
Family and friends can also gift money into the college fund for birthdays and holidays to grow the account through grassroots support. Promote awareness and access to the fund.
With an early disciplined savings approach, covering a young child's future education becomes far more feasible. Consistent planning today allows celebrating big academic achievements 15+ years down the road!
