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College tuition has been on an upward trend for decades, so saving enough money for your child’s higher education expenses is often difficult. No matter your financial situation, you can take concrete, (nearly) painless steps now to save money for this big expense.
If your preteen or teen has a job, you should require that they put away 1/3 for their college fund. Convincing them to do so may take some doing, but they need to take some ownership of their future. Even $100 a month will be a big help when they begin school, and their saving now will reduce the amount they will have to pay back for any student loans they receive. They may also value their education more if they financially contribute to it.
Many states have 529 plans that allow you to save money for college and receive tax benefits. A 529 pre-paid plan allows you to buy college tuition credits now at a price that is sure to be less than when your teen actually begins college. This strategy works best if your child has an early preference for a particular school. Otherwise, you may pay for the University of Missouri, but your child insists on heading to the coast instead. You can get your money refunded, but the return on your investment may be small.
Many people have difficulty regularly saving or investing their funds. If you find it hard to put money aside, try automatic investing. You can set up an account through Betterment or a brokerage firm and have a set amount of money taken from each paycheck. If you prefer, you can arrange automatic debits from your bank account instead. The amount can be modest, but, over time, can lead to a robust college fund. Soon, you will look at the deduction as just another regular bill like your utility or insurance payments.
Saving for college can be painless or nearly so. Even if your child is already in high school, it’s not too late to make a dent in the upcoming education expenses. If your child decides not to attend college, you will have the funds to help them in other important areas.