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Saving Money For College - Practical Ways to Save Money for College

start early consider mutual funds 529 savings plans do not get discouraged

From the moment a new child is born into the world, parents have exactly 18 years to save inordinate amounts of money to put them through college. As the economy continues to struggle, many families are coming up with creative ways to save money for college. The college fund can be a place where not only parents – but also children – invest in the future on a monthly basis, building hopes and dreams for the future and encouraging academic achievement along the way. Here are some practical ways to go about saving up the cash to put your kids through college.

Start Early

This may seem obvious but it is worth stating loud and clear, the earlier you begin saving for college the less stress you will have as high school graduation approaches. Money invested in savings accounts, bonds or stocks increase in value exponentially, which means that putting a way a little every month from the day each new child is born may not look like much at first, but the amount is likely to shock you by the time 18 years has come and gone.

Do NOT Early Dip

This may seem like another no-brainer tip, but you can bet that you will be tempted a million times over to dip into your college savings. Do not do it or you will likely repeat the bad habit and deplete your fund rather than continue building it up. Set up a separate emergency savings account that you can dip into in case of accidents or unforeseen crisis, but do not dare touch your college account or you can kiss all of that explosive exponential growth goodbye.

Consider Mutual Funds

While mutual funds are not right for everyone, they may be a wise option for individuals that do not wish to invest a great deal of time into learning about stocks, bonds and long-term savings accounts. When you invest in mutual funds, all of your investments are handled by trained professionals whose job it is to make your portfolio grow every year. Your professional mutual fund representative will keep track of the daily rise and fall of your stocks so that you don’t have to, and they will adjust your investments whenever they feel it is most beneficial to you to do so. Blindly trusting any mutual fund corporation is not smart when your children’s college education is on the line, so you would be wise to check in with your investment company on a regular basis to get a feel for their activity in your holdings.

529 Savings Plans

There is a lot of talk going on these days about 529 plans, and for good reason. These loans carry tax incentives in order to encourage individuals to invest in higher education. All withdrawals that qualify with your policy regulations are completely free from federal tax, up to $200,000 per beneficiary. The amount of money this saves investors is incredibly substantive and the 529 plan does not carry with it any age or income limitations. This means that anyone with an eye toward the future can use a 529 plan to accrue a large amount of money for your children’s higher educations.

Do Not Get Discouraged

Research shows that if you put away $100 per month at current interest rates, over the course of 18 years you can accrue just shy of $50,000. Keep this in mind those months when the last thing you want to do is scrape together an extra bill to put away for college.

If you have an eye one expensive Ivy League schools, $50,000 can seem like a drop in the bucket. Again, do not get discouraged. You do not need to have the entire 4 years worth of tuition saved by the time your child is ready to enter the Ivy league. Just make sure that you have enough to get them in the front door and their performance can take care of the rest by way of grants, scholarships and low-interest loans that do not need to be repaid until after graduation.

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