It is never too early to start a college fund for your child’s future. Many parents do not start saving money until their children have started school, but you can start saving as soon as they are born.
Think about your child’s first birthday: he or she won’t remember any gifts, but savings bonds or checks deposited into a college fund can grow into a gift that your child will be grateful for 17 years later.
Here are four options to help set your child up for schooling, living expenses, and other miscellaneous events that may come their way as they enter adulthood.
Gerber Life College Plan
This plan provides life insurance as well as a school fund. You can set up affordable fixed payments and your money will continue to grow, even in the event of an economic downturn. Your child will receive a guaranteed payout of $10,000 to $150,000, depending on what you put in, and can use the money for anything, from college expenses to electric bills.
There are two types of 529 plans, which are also known as qualified tuition plans: prepaid plans and college savings plans. Prepaid plans allow you to purchase tuition credits at today's rates to be used in the future. They may be administered by states or higher education institutions. Currently, all states offer a college savings plan or a prepaid tuition plan or both. College savings plans are different because they are based on market performance of investments, which typically consist of mutual funds.
TrustEgg is another fund that allows the child to use the money toward other things besides school. An account with TrustEgg is a UTMA (Universal Transfer To Minors Act) custodial account. You can make contributions and share the account with friends and families who might want to contribute. There are no minimums, no upfront fees, or maximum contribution limits, but there is an annual maintenance charge of less than one percent of the amount in the account. When the child turns 18, he or she will receive the funds whether or not it’s for school.
A simple savings account with your bank also works just fine. Contact your bank to see what plans they can provide. Most banks also pay you interest based on how much you save a month. It may not be much, but every little bit added counts!
You can always keep money stashed away in your home, but it is safer and smarter to invest it in a bank or school fund. Tuition is always rising, the economy is unpredictable, and no parent wants his or her child to struggle because of a financial situation.