Best Ways to Save Money for College

By: Jamie Jefferson

When it comes to saving money for college, each person will have their own best way. However, there are some tips that can start everyone off on the search for the most suitable plan. Note that these ideas are general information only. Talk to your financial planner and accountant before deciding on the best course of action for you.

1. Look into available 529 Plans. 529 college savings plans are state plans. They allow you to save money for college in a way that offers tax advantages, similar to a 401K retirement savings plan. These plans differ from state to state. They also depend upon a variety of factors, such as your location, your child's age and the risk level you choose. Generally speaking, these plans are fairly easy to get into and provide a secure place to keep college savings.

2. Start saving for college as early as possible. This will allow you to save a little at a time instead of having to save large chunks at one time.

3. You'll also want to involve your child in the savings process. Encourage her to set aside a bit of her allowance or babysitting money, for example, to contribute to her college fund. Discuss interest rates and the various ways that money saved is able to grow. You may also want to consider a situation in which you will match the money that your child invests in her college fund.

4. Look into stocks, which may offer the best return for your savings. By investing in stocks you are taking a risk, but the pay off can be potentially higher than many of your other options. Many investors say you should always have some of the college savings in stocks.

5. It also helps to keep in mind that college savings does not mean you have to save the full amount for all four years of college. You child should be able to get scholarships or other aid that can help make the difference. The college savings should cover the basic costs at least for the first couple years.

6. Take the time to shop around and look at different options. Talk to a professional, too. You should develop a good, strong plan before you start saving so that you have it organized and you know you are on track with your savings goals. Make sure you are informed before you jump into any savings plan.

There are a lot of things to consider when saving for college. The most important thing is that you are, indeed, saving for this important time in your child's life.

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