If you or your child is on the fast track academically and wants to attend college then you may be wondering if you can save for your academic future just as quickly. The truth is, college is much more expensive than it was 15 years ago and promises to be even more expensive as the years go by. This means, saving for college may not be as simple as it used to be.
However, saving for college can be accomplished. It just means having a little discipline and the right plan.
3 Ways You can Have for College:
1) Open a Coverdell Education Savings Account (ESA)
By opening a Coverdell Education Savings Account (ESA) your family can name a beneficiary (someone under the age of 18) then place up to $2,ooo per year, per child into the account. The account allows you to invest in stocks, mutual funds, bonds, certificate of deposits, money market funds, or simple cash. One major benefit of using one of these accounts is being able to defer taxes on the federal level – and possibly on the state level. But a disadvantage is only learning about the account in enough time to save a few thousand dollars.
2) Try the 529 Savings Plan
The 529 Savings Plan is another option for putting money away for your children. Unlike the ESA, you can contribute over to $300,000 per year in the 529 Plan. But similar to the ESA, you can benefit from tax-free contributions. All funds in this plan must be college related; if they’re not, you’ll have to pay taxes on them and suffer a 10-percent penalty.
3) Cut Unnecessary Expenses
In addition to saving your money in accounts that will allow it to grow tax free, you might try cutting any unnecessary expenses that could be used to your savings. For instance, if you maintain subscriptions to 5 different magazines that you don’t actually read, you might consider canceling them and just buying them off the rack when they have interesting stories. Also, you can try cooking all of your meals instead of eating out, and making your own coffee instead buying the $3 cup every morning. Anywhere you can save, it’s worth a good try to make setting aside money that much easier.
So are you ready to save? Give these awesome strategies a try, it could be just what you need to accomplish your goal.