Saving for your children’s future is an important responsibility for parents, and it’s getting more expensive to do so. Finding ways to finance education expenses can be quite the challenge as education costs continue to rise. Here’s what you need to know…
One of the most important parts of financing education is to remember to start early in order to set yourself up with success when it comes to meeting your long-term goals. Although many families have chosen traditional savings accounts as a way of financing education expenses, most experts agree that it is the least cost effective of all options.
One great way to save for your children’s education is with Educational Savings Accounts. These accounts, which are available at most banks, offer parents a tax-free way of financing education expenses. Parents can contribute up to two thousand dollars per year into these accounts.
Many colleges also offer families the opportunity to take advantage of prepaid college tuition plans as a way of financing education. This allows parents to lock in a tuition rate at the college, but comes with the disadvantage of not allowing the child to choose which school they’d like to attend. Financing education is important, but most parents prefer to let the child choose their school.
There are also state-managed investment accounts, called 529 plans, which are great options for financing education expenses. Because they allow large annual contributions, they offer a big advantage over Education Savings Accounts and are also great ways to allow family and friends to be involved in financing education expenses for your children’s future.