The birth of a child comes with joy and responsibilities. Any parents would wish to lay the best foundation for their child by investing in their future. Today, parents have every reason to be worried by the ever-increasing costs of education. As such, the best thing to do is to save for your child’s education. However, some parents are not very sure about what it takes to save for college education. Here are some common concerns and possible solutions when it comes to saving for college education.
How much should one save?
College costs are not uniform. As such, the amounts you save depend on your financial ability and your expectations. This implies that you need to have an idea of how much it would cost you to get your child to an institution of choice and save accordingly. Here, you also have to factor in same inflation costs and how your savings will be compounded.
How should I save?
Ideally, this question seeks answers about the schedule to use when saving for your child’s college education. With an idea of how much you want to save, you might consider making a lump sum payment at the start or make small monthly payments from your earnings. With a lump sum, you stand to get more interests that someone that makes monthly payments. Without a lump sum, you only need to have a goal and create work with a good savings plan.
What kind of savings plan should I use?
This question addresses a huge concern among most investors –taxes. The good thing is that most federal and state governments offer significant tax breaks. However, the tax breaks and benefits are quite complicated. As such, most parents turn to the 529 plan due to its flexibility and superior tax benefits. Since these plans vary considerably depending on the state, it is advisable to consider the insights BlackRock’s Education Center to expand your knowledge on financial planning for college education.
Saving for college and retirement is hard for most parents. As a tip, you should start saving either college or retirement as early as possible. You also need to prioritize, if you cannot afford to save for both. If you decide to secure the academic future of your child first, you need to get the best saving plan. The main idea is to have a goal, adopt the right savings schedule, and most start early.