Ways To Save For Your Kid’s College Education
Majority of students use college student loan. It means that student are owed by private and federal student loans even after graduation.Despite the loans being helpful, they are also a big burden.However, your kid does not have to study on college student loan.It is advisable that you begin preparing early in advance for the college education of your child. You should save what you can to reduce the burden of student loan. Below are a few ways you can save for the higher education of your child.
You need to keep in mind that each penny means a lot. If you want to have bigger savings, you need to start saving early. In order to grow your savings, you need to have a budget you can stick to.You can opt to cut back on expenses such as transportation, entertainment and utility costs. The initial savings may be small but eventually they will add up.
Consider the advantages of Roth IRA.Roth IRS is an individual retirement account that covers college costs. The money grow free of taxes.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.The plan is free of tax.It is tax free to make withdrawals that are education related.Also, you are free to pick different investment options.Growing your money is flexible.
Also, consider setting up a 529 education savings plan. This is an alternative for those who don’t qualify for an education savings account. You can use 529 plan to withdraw for different college costs. It covers room and board apart from tuition.You can withdraw the money and use it across all universities and colleges.529 plan gives you the option of changing the named beneficiary.
Consider an educational trust fund for your child.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 kid needs to show the bills to the trustee.
Another way is to become a rental property owner.You can still work and make money on the side. 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 choose to rent out a section of your property if you cannot afford to buy rental properties.