With the obvious exception of buying a house, paying for your child to attend college is the single biggest expense you face as a parent. Taking special care and making detailed plans on how to save for your child’s college education is the best way to make the whole process a little easier. The wisest course of action is to begin saving as early on in your child’s life as possible. Following this detailed timeline will give you an idea of what you should be doing to save money for your child’s college education.
Opening an education IRA is best done when you are 15 or more years away from college, this will allow you to conservatively save money for your child’s education. Since there are many years before your child will need the money you may also want to invest in aggressive stocks to help your child’s money grow faster. As college approaches you will want to lay off the aggressive investing and plumb for more conservative saving ideas but to begin with investing aggressively is fine.
When college for your child is about ten years away there are many ways to increase the balance of your college fund. One of the first things you may want to consider is prepaid tuition plans, these allow you to pay for your child’s college education over time before your child ever steps foot on campus. The only major downside to this idea is that it requires you to pre-decide where your child will attend college. It is a wise idea to consult with your accountant about what savings plans are on offer from the state for college funds. It is more than likely that your accountant will be able to point you in the right direction of saving plans that will help you meet your targets or provide tax breaks. It is important the make sure your portfolio is stable and secure as you approach this mark in the timeline. At this mark it is important to start saving more conservatively and making sure all your investments are organized.
When you reach between five and ten years left ’til college it is a great idea to start moving your money toward New accounts and bonds. Bonds can be a good saving option as well as a fixed income. The first step you might want to take when you get to this point is to consult with a financial planner that will help you to decide on the best options available to you.
When you get down to the five year mark it is imperative that your investments are safe and secure and not in any aggressive funds. At this time you should be looking to guard the money you have and not risk it.
If you realize that even after 15 years of saving you still don’t have enough to send your child to college then it is the best time to consider any number of student loans on offer that don’t need to be paid back until after your child finishes college and offer los interest rates. With loans available for the parent as well as the child there are lots of flexible options for you to choose from to help your child get to college.
Once your child is attending college there are lots of tax breaks that you can file for on your tax return that will help you out. Making a plan and starting early are the best ways to go about saving for your child’s college education.
About the author: Michelle Walton is a researcher and author for the calorie chart and unhealthy food websites.