Thanks to RBS Citizens Financial Group for this informative sponsored post. You can read the full CFO disclosure policy here.
As a parent, one of the most important things you can do for your child is help pave their way into the future – and for most that will mean getting a college education. With education costs on the rise, establishing your college savings plans as early as possible is extremely important. Consider setting up a designated college savings account that will accumulate interest on your hard earned contributions. Here are three things you can do to make saving for college easier for you and your family:
- Start college savings plans early. When it comes to setting aside money for your child’s education, you cannot begin too early. Many parents wisely start funneling money into an account designed to fund their child’s future long before first words are even spoken.
- Put money into a college savings account on a regular basis. No matter how you want to save money for your child’s education, you should try to put money into the account with each paycheck. Designate an amount that you are comfortable setting aside and have it automatically deposited into the account of your choice. Some popular college savings accounts include:
- Traditional savings accounts: Although it may not be specifically designated as a “college savings account”, an interest bearing savings account at your bank is really all you need to start a monthly habit of investing in your child’s future. Ask your bank about features like automatic savings account transfers, which can help you to commit to paying yourself first every pay period.
- 529 accounts: Maybe the most well known method of saving for college, 529 college savings accounts provide college savings with a tax advantage. Money can grow in the account tax-deferred and all money saved in the account can be withdrawn by the beneficiary of the account tax-free as long as it’s being applied to qualified higher education expenses.
- College savings account: Making monthly contributions into a college savings account provides you regular savings with interest, and some banks even offer incentives for regular contributions.
- Add high interest savings accounts into your college savings plan. One way to add even more money to your college savings plan is to utilize high interest savings accounts. Take a portion of what you’ve been saving for college and transfer it into a high yield account for an amount of time you are comfortable with. This will give you the opportunity to earn a bit more on your money, and diversify your savings portfolio.
- Certificates of deposit: Opening a certificate of deposit (CD) for your children can provide them with a high interest way of saving for college that will continue to accumulate interest every term it is renewed. If desired, after the date of maturity funds can be removed from the CD and invested into an alternative savings product or used for other educational needs.
- Money market accounts: For high interest savings with a slight bit more flexibility than CDs when it comes to withdrawals, money markets can be an attractive college savings account alternative.
Start making college savings plans today
Just the fact that you are thinking about saving for your child’s college career shows that you are on the right track. If you are ready to get started, a good first step is to visit your bank and talk through the options available to you. Commit yourself to regular contributions and know that you are well on your way to helping your child open doors in the future.