Getting a child ready for college sometimes needs to happen in grade school. For instance, saving up to pay for it without taking student loans should start very early. If you start early enough, you’ll have enough money to send your child to an elite school. Having enough money to pay, plus Going Ivy college admissions consulting, could get them into an Ivy League school and be set for life.
However, it isn’t as simple as putting money into a regular savings account. There are much better ways to supercharge tuition savings, especially when you start saving early. In this article, I will go over some of the best ways to put money away to pay for your child’s education.
1 – Tax-Advantaged Savings Accounts
When it comes to saving for your child’s college education, tax-advantaged savings accounts are a great option to consider. These accounts offer tax benefits that can help you maximize your savings.
There are a few different kinds so finding the right one means understanding the differences. For example, a 529 plan is a state-sponsored savings plan that allows you to save for your child’s college education tax-free.
You can invest your contributions in mutual funds or other investment options, and your earnings grow tax-free as long as you use them for qualified educational expenses.
A Coverdell Education Savings Account (ESA) is similar to a 529 savings account that allows you to save up to $2,000 per year for your child’s education expenses. You can invest your contributions in stocks, bonds, or mutual funds.
2 – Traditional Savings Accounts
A regular savings account won’t do much to help you save or have any extra money when the time comes for your child to pay for tuition. However, there are other traditional savings accounts you can use to make some extra interest without investing the money.
A money market account is similar to a savings account but typically offers a higher interest rate. Money market accounts are a good option if you’re looking for a slightly higher return on your savings.
A certificate of deposit (CD) is a savings account that requires you to deposit money for a set period. CDs typically offer a higher interest rate than savings accounts, but you can access your money once the CD reaches maturity. That makes it a good option for college tuition since you are setting it aside for years anyway.
3 – Investment Accounts
Investment accounts can offer higher returns than traditional savings accounts, but they also come with more risk. A custodial account is an investment account that’s set up for a child under the age of 18.
An adult custodian manages the account until the child reaches the age of majority. Custodial accounts can be used to invest in stocks, bonds, and other securities.
Final Note
It’s essential to research and consult with a financial advisor before making any long-term investment decisions.
