What You Need To Know To Save For The College Education Of Your Kids
Majority of students have college student loan. It means that student are owed by private and federal student loans even after graduation.Even if the loans are useful, also they are a big burden.However, it does not mean that your student should study on college student loan.You can prepare for early for your child’s college education. You need to save to get rid of the burden of student loan. Below are a few ways you can save for the higher education of your child.
You need to keep in mind that each penny means a lot. The earlier you save, the bigger the savings will grow. Come up with a budget that you can stick to so as to grow your savings.You can opt to cut back on expenses such as transportation, entertainment and utility costs. The initial savings may be small but eventually they will add up.
Think about the benefits of Roth IRA.Roth IRS helps in covering college costs despite it being an individual retirement account. The money grow free of taxes.You can use the money to invest in stocks and bonds. The good thing about Roth IRA is that withdrawals for contributions are penalty free.
You can choose to open an education savings account.It is preferable than a regular savings account provided you can save more than $2,000.The plan is free of tax.It is tax free to make withdrawals that are education related.You can also choose several investment options.You have the flexibility of growing your money.
Also, consider setting up a 529 education savings plan. It is a great alternative if you don’t qualify for an education savings account. 529 plan can be used for withdrawing against different college cost. It covers room and board apart from tuition.Once the money is withdrawn, it can be used in different universities and colleges.You can change the name of the beneficiary with this plan.
Consider an educational trust fund for your child.The child is the beneficiary and a trustee a different person. The trustee is the one who ensures the funds cater to your child’s education. Your child will have to show the trusted the receipts, invoices and bills.
Another way is to become a rental property owner.You still maintain your work while making money on the side. The more the tenants stay at your property, the more money you make.
In addition, master the art of house hacking to save money for the entire family. House hacking refers to others making payment of some or all of your housing costs. You can start with the property you have if you don’t have cash to buy rental properties.