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How to Get Started with a College Saving Plan

Watch more How to Manage Your Money videos: http://www.howcast.com/guides/48-How-to-Manage-Your-Money Subscribe to Howcast's YouTube Channel - http://howc.st/uLaHRS Get started with a college savings plan today, because there's nothing more important. Howcast uploads the highest quality how-to videos daily! Be sure to check out our playlists for guides that interest you: http://howc.st/ytmainplaylists Subscribe to Howcast's other YouTube Channels: Howcast Health Channel - http://howc.st/HOE3aY Howcast Video Games Channel - http://howc.st/tYKKrk Howcast Tech Channel - http://howc.st/rx9FwR Howcast Food Channel - http://howc.st/umBoJX Howcast Arts & Recreation Channel - http://howc.st/vmB86i Howcast Sports & Fitness Channel - http://howc.st/vKjUjm Howcast Personal Care & Style Channel - http://howc.st/vbbNt3 Howcast empowers people with engaging, useful how-to information wherever, whenever they need to know how. Emphasizing high-quality instructional videos, Howcast brings you experts who provide accurate information in easy-to-follow tutorials on everything from makeup, hairstyling, nail art design, and soccer to parkour, skateboarding, dancing, kissing, and much, much more. Step 1: Start now Start saving right now -- even if your child is an infant. The more time you have, the more money you can save, and the more interest you'll earn. Step 2: Get a 529 Sign up for a state-sponsored 529 savings plan. All the money you put in earns interest tax-free, and there are no fees or taxes when you withdraw it as long as you use it for school. Each state has different rates and rules; type "529" and a state name to find information. Tip You don't have to choose your own state's plan, and you don't have to stay with one plan. You just have to limit transfers to once every 12 months. Step 3: Start an account in your own name If you open any other accounts for your child's education, make sure you put the accounts in your name. This will make it easier for your child to qualify for federal financial aid because the financial-aid application assumes only 5.6 percent of a parent-owned account will be used to pay for college, versus 20 percent of a student-owned plan. Step 4: Join Upromise Register at Upromise.com, and you'll get money for your college fund every time you buy something at specific retailers and restaurants. You can arrange for the rebates to be deposited into your 529 savings plan every quarter. Tip Friends and relatives can open UPromise accounts linked to your child's 529. Step 5: Consider other funds Consider other plans, like mutual funds that specialize in college-tuition savings, or an educational IRA. Just like a 529, these have more lenient tax rules than savings vehicles not earmarked for college. Consult a financial adviser to get started. Step 6: Invest wisely When investing for college, consider how many years you have to save. Stocks have the potential to provide higher profits but are risky; bonds are safer, but yield limited returns. If your child is more than 10 years from college, invest slightly more heavily in stocks. If your child is past third grade, choose safer investments. Step 7: Get the word out Tell loved ones about your child's college fund and ask them to contribute whenever there's a holiday, birthday, or special occasion. Step 8: Have your child help, too! College isn't just your responsibility! Once your child is old enough for an allowance or a part-time job, encourage them to add to their college fund. Research shows that children who contribute to their college fund tend to get better grades because they learn to take their education seriously at an early age. Did You Know? Over the past thirty years, college tuition rates have risen between 5 to 8 percent a year -- outpacing inflation.
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