Saving for College: Ready, Set, Go!

Are you ready to get your child’s college savings going? There are lots of options to choose from, and the earlier you start, the better. Here’s a quick guide to get you started!

Ready, Set, College Savings Go!

Once you’ve made the decision to start saving for college, it’s time to put together a plan. The most common ways to save for college are through a 529 plan, a Coverdell Education Savings Account, or a savings account. Each option has benefits and drawbacks to consider.

A 529 plan is a tax-advantaged savings plan sponsored by states, which can be used to cover qualified education expenses. This type of plan offers tax and financial aid benefits, and in some states, deductions or credits on your state income tax.

A Coverdell Education Savings Account (ESA) is another tax-advantaged savings plan that may be used for elementary, secondary, and post-secondary education expenses. This type of plan allows for tax-free withdrawals for qualified education expenses.

Lastly, a savings account is a great option for building up your college savings. You can choose from a regular savings account or a high-yield savings account, both of which are FDIC-insured. With these types of accounts, you can earn a decent return on your savings with lower risks.

On Your Mark, Get Set, Save!

Now that you’ve determined the best way to save for college, it’s time to actually start saving. The earlier you start saving, the better, as compounding interest can help your savings grow more quickly.

Set up an automatic transfer from your paycheck or checking account to your college savings account. This way, you won’t have to worry about manually transferring money every month.

You can also opt to contribute to your college savings account on a monthly basis. Many banks offer this option, and you can choose the amount and frequency of your contributions.

Finally, if you receive a windfall of money (such as a tax return, inheritance, or bonus), consider contributing a portion of it to your college fund. This can give your savings a significant boost.

Saving for college can seem intimidating, but it doesn’t have to be. With the right planning and the right savings vehicle, you can save for college with ease. Get started today and be well on your way to giving your child the gift of a college education!