What You Need To Know To Save For The College Education Of Your Kids
Most students rely on college student loan. It means that even after graduation, they are still owed on federal and private student loans.Even if the loans are useful, also they are a big burden.However, your child does not have to study on college student loan.You need to start preparing for the education of your child. You should save what you can to reduce the burden of student loan. Read on to get tips of how you can save for your child’s higher education.
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.Decide on which expenses you need to cut back on such as entertainment, transportation and utility. Don’t be discouraged by the initial savings because they will eventually add up.
Consider the benefits of Roth IRA.Roth IRS helps in covering college costs despite it being an individual retirement account. The money is usually tax free.The money may be used for different investment options like bonds and stocks. The good thing about Roth IRA is that withdrawals for contributions are penalty free.
Consider opening an education savings account.If you have the capability of saving $2,000 or more, it is best to opt for an education savings account instead of the regular savings account.It offers a savings plan that is tax free.Making withdrawals that are related to education expenses is tax free.Also, you are free to pick different investment options.There is flexibility when it comes to growing your money.
Also, you can set up a 529 education savings plan. It is an alternative if you are not qualified 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 It covers room and board apart from tuition.Once the money is withdrawn, it can be used in different universities and colleges.This plan offers the option of changing the beneficiary’ name.
An education trust fund is great for your kid.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.
Being a rental property owner is a great way to save because it is a passive income generator.You still get to make money on the side when working. Provided you choose your tenants wisely, you will build a long term relationship.
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.