The Ultimate Guide To Save Money For College
Do you want to save money for college? Here are sweet ways to get you on the right track. You only need a few easy strategies and accounts for saving for college.
That feeling you get when you figure out the enormous fees you need to loan to pay for college.
But that shouldn’t disrupt your future.
You can change it and I’m going to show you.
Imagine being able to save so much that your parents don’t have to spend too many sleepless nights.
The beauty of saving is that your parents won’t have too much pressure on their paychecks anymore. Saving also removes feelings of uncertainty.
Naturally, saving up the pennies from errands, won’t work but I can show you what might do the trick.
You can save money for college in easy ways that guarantee success. Are you ready to learn the strategies of saving for college?
Great! Let’s get save money for college.
Open A College Fund With A 529 Plan
This will be number one on our list.
A 529 account is a savings account that is opened by an account owner who controls the account for a beneficiary. There is no age limit to using the money in the account.
Other accounts like the Coverdell account have an age limit of 30. In a 529 account, there are no restrictions attached to the income that you can put into it.
Everyone is eligible.
No income limit.
No annual contribution limit, or even age limit.
Opening a 529 plan has always been the most recommended among options when it comes to saving for college.
This is because of its flexibility and better tax options. In regards to tax options, there is a high tax deduction and tax- free withdrawals attached to the 529 plan.
When using a 529 plan, learn to take advantage of the state tax break offered as well.
Many states offer a tax break for the 529 plan and you can take advantage of it, and if your state doesn’t offer a tax break then you can always move over to the state that does offer a tax break.
Another good reason why so many persons prefer the 529 account is that the donor stays in control of the account, and can ensure that the money is used for its intended purpose.
Unlike the custodial account wherein the child gets access to the account once he reaches the legal age, with a 529 account, you stay in control of the account. Also, read: Easy ways to invest in stocks as a beginner
Open A Custodial Account
Just like the 529 accounts, the custodial account is also a savings account an adult runs for a minor (someone below 18 or 21). The custodial account has little or no tax advantage compared to the 529 accounts, but it has other options for saving other types of assets.
There are two types of custodial accounts, the UTMA, and the UGMA account.
The UTMA allows the deposition of any kind of assets, which includes properties, royalties, real estates, and intellectual properties. So with the custodial account, you are not limited to cash alone like the rest accounts in the savings for college platforms.
The other type of custodial account is the UGMA account, which allows the deposition of only cash assets such as money etc.
A good advantage of the custodial account is that there is no income limit, or any withdrawal limit.
Make Use Of The Educational Savings Account (ESA)
This account allows you to save at most $2000 after tax per child you want to train into college.
It is tax-free, and this is a very good advantage for you to use. There is an income limit in order to be qualified for this plan, and contribution is limited to $2000 per year.
Just like the 529, it is a tax-free earning growth account, and tax-free withdrawals for funds spent on qualified expenses.
When using this account, be aware of saving too much.
The age limit of the beneficiary for this account is 18 or younger, and must use once the beneficiary turns 30, all money left.
The beauty of using an ESA is that your qualified expenses in regards to any withdrawal are not limited to just tuition cost, but you can also use it in getting academic books for the beneficiary, room, uniforms, transportation, computer technology to be used by the beneficiary while he or she is in school, and some other great options.
Make Use Of The Roth IRA Account
Compared to other traditional IRAs and even the 401 Ks plans, the IRA account is more flexible when it comes to the withdrawal of contributions deposited in it.
The Roth IRA is a taxed advantage because it is funded with an after-taxed dollar, so you don’t have to pay for tax again, and once you start withdrawing funds, the money is taxed free to use.
So it’s a good idea to use the Roth IRA if you know that your future income will be taxed higher.
However, there is a 5-year rule attached to the IRA account. So, you can’t withdraw the money in this account until 5 years down the line.
You can begin saving for college in this account at least two years before gaining admission, so you can use it within the last years in college.
It’s also a perfect way to save for the minute you step out of college.
Once the five-year timeline elapses, you can withdraw your money from the IRA account at any time with no tax or penalties. Then, make sure you make proper inquiries before withdrawing from an IRA account.
With the IRA account, you should be aware that you will not be able to deposit money in any other form of asset, but money must be made in cash and it also has options of mutual funds, stocks, etc. after contributing your funds.
Take Advantage Of A High-interest Savings Plan
If you are serious about saving money for college, then select a high-interest savings account. Your interest in a high yield savings account can be 20 to 25 times higher than what the traditional savings accounts pay.
Your parents can open this account on your behalf and set up automatic additions from their traditional bank account to this savings account.
It’s a more consistent and effective way to double their savings and in no time, you can save money for college. If you won’t use the high-interest savings account, you can set up an automatic savings account.
This is whereby you save money without getting to see the money. Setting up this automatic account is far more effective and consistent than doing it manually. In this model, there is an automatic transfer of funds from your bank account to your savings or investment account at a particular interval.
So in order to become consistent with your saving money, you will have to set up this plan. Walk up to your bank and ask to open a savings account that links to your checking account. Then request a direct deposit from a part of your paycheck to a savings account.
Bear in mind that 529 accounts operate with the automatic savings option whereby everything is controlled in your absence and makes it all the more beautiful.
This automatic savings plan can work for any kind of account and savings plan. As long as your paycheck account is linked to your savings account, you will always have the automatic plan activated for you.
Get A Job
Every kind of savings account we’ve talked about can only work if you have an income. Your parents can only do so much with their paychecks but you can go the extra mile for them.
There are many people looking for young adults like you. Go online and do a good search or check out the local restaurants and bars. Don’t be afraid to work overtime, you are saving for the future!
Here are a few online jobs you can put your hands to:
- Go on YouTube and create your own vlogging account
- Become a social media manager
- Tutor K-12 students or for extracurricular talents
- Become a Data Entry Clerk
- Search Engine Evaluator
- Freelance proofreader
- Virtual recruiter
- PowerPoint presentation designer
- Virtual assistant etc.
Get Your Friends And Relatives To Save Money For College
Most grandparents and relatives will love to help you save money for college. Who knows? They might already have plans for it.
So, approach them, they have the same vision as you and could help in saving for college. Embrace the opportunity
Many 529 plans are now recently adding crowdfunding options and tools, so family members can now be easily asked to contribute to saving for college funds. With these crowd-funding tools, the account owner can create pages that will be shared on social media platforms and used to save money for a student’s college fee.
When you let others know about your plan of saving for college you will not only get support but you will also inspire someone who might not have started saving money for their child’s college also.
Apply For Scholarships And Advance Placement Classes
Scholarships are an easy way to save money for college that you won’t be paying back.
You don’t have to be in college first before you apply for scholarships. This is because there are so many other scholarship programs that are eligible for high school students.
If you’re great in sport, athletics, and other games, then look out for scholarship programs rewarding such ability. Advanced placement classes will help you to pay for college fees, and there are those taken in high school also.
Now, you have awesome ways of saving for college. Here’s a question for you, should you stop saving once you have the down payment for college?
Send me a message; let’s discuss your next options once you get through the front doors.
Good luck on your journey to saving money for college!