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Saving for college is a big undertaking. Every parent wants to set their child up for success. From our earliest days as parents, we strive to provide our children with opportunities that will foster growth, knowledge, and enrichment. Ensuring they receive a quality education is one of our biggest goals.
I went to college and law school, without the benefit of a college fund and I have the student loans to prove it. However, I was also fortunate to receive scholarships and other forms of aid. My point is: your kids will be alright even without a hefty parent-sponsored college fund. However, if you have the resources to do so, you can help ease the burden of paying for college and put your kids on stable financial footing as they enter adulthood. It may sound like a daunting task, particularly if you have multiple children and/or will be paying for private school before then. However, there are several different options from which to choose.
Here are seven creative ways to save for your kids’ college fund.
1. Set up a 529 Savings Plan
You can start saving for college by setting up a 529 plan. A 529 plan is a type of college savings plan that offers tax and financial aid benefits. They are offered by most states, and there are privately operated 529 plans are well.
529 plans may also be used for K-12 tuition in addition to college costs. There are two types of 529 plans: college savings plans and prepaid tuition plans. Of course, there are some restrictions on these plans, which is why some families opt for alternative savings plans.
2. Consider Alternative Savings Methods
If you want to rebel against a traditional 529 savings plan, you can save for college through other savings and investment methods including stock investments, Roth IRAs, mutual bonds, and other taxable accounts. If you are uncertain of which plan will be best for you, schedule a meeting with a trusted financial advisor and assess your options.
3. Get the Grandparents on Board
Once you’ve decided to start putting savings aside for college, get the grandparents on board. Let them know that in lieu of the usual gifts that inevitably collect dust and wind up in the donation bin, you’d prefer a contribution to your child’s college savings plan.
Grandparents can also choose to open their own 529 savings plan. This U.S. News & World Report article explains the benefits and how to avoid the pitfalls of a grandparent-owned 529 account.
4. Let Allowance Do Double Duty
If you give your child an allowance, you can institute a policy that a portion of their allowance goes directly to the college fund. You can do the same thing with other monetary gifts they receive throughout their childhood as well.
Regardless of whether your child ends up going to college, this will teach him or her fiscal responsibility. In the end, the money will still be theirs and, better yet, it will still be there.
5. Piggy Bank It
Another way to creatively save for college is to let the change add up. Find a few bucks in the dryer? Toss it in your kid’s piggy bank. Do the same with all loose change that finds its way to you. You’ll be surprised at how quickly a handful of change can grow over time.
6. Get Thrifty
As your children eventually grow out of their childhood wardrobe and toys, sell back the items to a consignment shop—and use the profits for the college fund. Eighteen years of consignment sales definitely add up!
7. Get Your Kid Involved
Finally, get your kids involved in the process. Encourage them to get part-time jobs as they get older and ask that they reserve a portion of their earnings for their college savings.
Encourage them to apply for scholarships relevant to their interests and qualifications. Further, inspire them to invest in experiences that will make them attractive applicants to their prospective schools.
Getting your children involved in their college savings gives them ownership over their experience, which will allow them to be more invested in their education. This is a good lesson to learn—especially if the bulk of their education will be family-funded.
Have you encouraged your children to actively save for college? What are you favourite creative ways to save for their education?
Want to learn more about financial wellness?
- 6 Tips on How to Save More Money for College
- 7 Money-Saving Resolutions Every Parent Should Make This Year
- Basic Money Lessons to Teach Your Kids