Save for Your Kid’s Education
October 15, 2019
Tips on How to Save for your Kid's College Education
“An investment in knowledge pays the best interest.”
Saving for your child’s education can be a challenge. It takes dedication, hard work, and time. However, at the end of the day, you’ll never regret saving too much! Education is critical to a child’s future as it will exponentially increase the likelihood that they’ll get a job and a good salary. Start saving today!
First Things First
As much as you want to start saving right away, it’s crucial to factor in your own finances first. Take note of your personal debts, retirement savings, and even emergency savings. This will make it easier to save for the future, because you won’t have to take any unexpected money out of their college savings in case of an emergency situation.
- Personal Debt: Once you’ve paid off your personal debts (student loans, credit card debt, etc), start looking to save money for your young scholar!
- Emergency Savings: Set up an emergency savings account. Emergencies come when you least expect it, so it’s important to be saving while you can.
- Retirement: Start saving up to 15% of your income and put it towards your retirement savings or employer retirement plan (401k or Roth IRA). Once you have your personal future savings established, it’s time to put money away for your child’s education and future.
Starting A College Fund & Ways To Save
There are a number of ways banks and credit unions can help you start a college savings account. Talk to your financial advisor and see which plan is right for you!
- Education Savings Accounts (ESA): You can start saving a maximum of $2,000 per year for your child as soon as they’re born. An ESA has tax free growth, so you’ll pay no taxes when you withdraw money for educational expenses. The investments within the account will increase the value of the account over time.
- 529 Savings: Another savings plan to consider is 529 Savings. If the contribution or income limits become an issue in establishing an ESA, your next best option is a 529 Savings account. You can contribute to both a Coverdell account and a section 529 plan in the same year, but there may be gift tax implications if you give more than $13,000 per beneficiary per year. If your child decides not to go to college, you can always use the funds in the account for another child’s educational expenses.
- AP Classes: While your child is still in high school, they will be given a few opportunities to take college-level AP classes. Some universities will give college credits at no cost for AP classes assuming you have passed the course.
- Get a Job/Save Money: When your kid reaches an appropriate age, you might suggest that they start their own savings account and get a job. However, make sure that this job doesn’t negatively affect their education and time at school.
- The Time is Now: As much as you wish you could slow down time, your baby is growing up every day. The time is now to start saving for your child’s education and future. Education is critical in this day and age, so set your child up for success!
Give your child a ticket to the world with the chance of getting a college education. Start saving today with Family First Credit Union! Our full-service products include high-interest checking accounts, low rate loans on vehicles, no-fee credit cards, small business services, student loans, home equity loans, health savings accounts, and more! We know the options are endless when it comes to choosing a financial institution. See what sets Family First apart. Become a member today or stop in and talk to one of our experts. You’ll be glad you did! For more information visit our website at home.familyfirstny.com or give us a call at (585)-586-8225.
Save Money with the Family First Federal Credit Union