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How to save money for your children’s college tuition

May 25,2012 by: Dallas Browne

Every young couple dreams about having children. When they come into the family, the joy is enormous. However, it is recommended to start thinking about your child’s future life as soon as possible. A child will need a lot of money, especially when the college is fast approaching. A recent study showed that a child will need around $100,000 for following college studies at a national University, while the private universities will cost around $250,000. This means a lot of money that you have to save in order to be sure that your child will take advantage of higher education studies.

The secret for saving money for your child’s college studies is the time. Making a plan since your child is still very small is a good idea. Financial specialists say that a smart move would be to start a saving plan that has already proved to be effective. Luckily, there are plenty of ways in which you can start, as a parent, to save money for your child.

A lot of people have already thought about their children’s future and started saving money since they were born. Most of them opened a savings account for their children. A savings account generally brings a 2% interest yield; even an online savings account has the same interest yield, so in the end, the amount you manage to save is going to be enough in order to offer your child the chance for taking advantage of higher education. A $190 saving per month means a total saving of around $50,000 by the time the child is 18 years old, while a $380 saving per month means a total saving of $100,000. Having all these money by the time your child turns 18 is going to be a tremendous help for you as a parent. This means that you will be able to not refuse your child a certain college or university just because the tuition fees there are too high.

Financial experts also recommend parents the CD laddering. A CD is also known as certificate of deposit and it represents a special type of account used by people to save money. The laddering method means moving the money, as well as the interest gained by a certain moment from one certificate of deposit into another certificate of deposit. You will gain more money by moving higher and higher amounts of money on longer terms into new certificates of deposit.

Last but not least, the 529 plan offered by the Government represents another great method for saving money for your child’s college tuition. Few people know what the 529 plan is. For those who haven’t heard about it yet, the plan is very similar to an IRA. The government offers parents the chance to save money for their children with the help of tax benefits.

As you can see, there are numerous ways in which you can save money for your child’s college. As a parent, it is important to offer your child the chance for getting a well-paid job thanks to the high education received, so start saving money as soon as possible.

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