It may sound absurd to some, but the right time to start a college savings plan is before your child enters pre-school. The money saved up over time can be used for your child's education in the future. Starting a plan that early is not feasible for some, and few parents don't even think of such plans. There are programs available to help parents in saving money for their child's higher education. One such is the 529 plan, which allows you to save money and provides the benefit of tax exemption. If you start early enough it just takes a few dollars a month to begin as long as you are consistent with the deposits.
How It Works
You can start an account for your child, grandchild or even for yourself. Some college saving plans gives you the advantage of deducting money from the account in the event of an emergency. These are well laid out and structured plans often implemented by either government or investing firms and organizations. Also, the balance maintained in a structured college savings plan cannot be used against you if you apply for financial aid.
Whether you choose a structured savings plan or one of your own, the benefits you get are many. The initial objective, of course, is to ensure your child's education beyond high school. You may have ups and downs in life, and it is best to have a plan of action in place to tackle all unfavorable circumstances. The great advantage of structured college savings plan is that you can take the money out, if need be, every year.
If you are saving money on your own, then the accrued interest can be utilized for something special or for things that you cannot afford immediately. The money adds up rather quickly if you let it and will aid when you decide to pursue an expensive course.
Normally, no or low costs is involved in college savings except for the money you deposit into the account. This amount should be reasonable and affordable even if it is just few dollars to be deposited a week. Analyze and choose a bank or financial institution that pays good rates on college savings.
Starting a college savings plan at the earliest is the best choice. The earlier you begin, the more money saved.
Many banks, mutual fund companies, and other financial institutions provide such attractive saving plans. Banks include Wells Fargo and Bank of America.