WiserAdvisor – Blog

Main Menu

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
    • Financial Trends/Government
logo
Header Banner

WiserAdvisor – Blog

  • Main
  • Financial Advisor Guide
  • Financial Planning
  • Retirement Planning
  • Education Planning
  • Investment Management
  • More
    • Personal Finance
    • Estate Planning
    • Financial Trends/Government
Education Planning
Home›Education Planning›Best Ways to Save for your Child’s Higher Education

Best Ways to Save for your Child’s Higher Education

By WiserAdvisor Insights
October 22, 2019
1227
0
Share:
Higher-Education

Last Modified on October 23, 2019

Benjamin Franklin, one of the founding fathers of America, rightly said – 

An investment in knowledge pays the best interest.

From the day you become a parent, everything in your life revolves around the betterment of your child. And yet, unfortunately many American parents do not put in enough thought towards their child’s education fund. The Federal Reserve Bank of New York recently quoted that the average student loan debt in America stands at $1.3 trillion. That is a huge burden to put on your child! Fortunately, with proper planning and savings, parents can contribute to their child’s education and save them from student debts. 

When saving up for your child’s higher education, keep in mind that college expenses are likely to go up every few years. Tuition fees could be double of what it is now. Calculate the time left for your child to go to college and make sure to accordingly account for inflation when setting goals for a college fund. Use a calculator to help you! 

Table of Contents

  • 7 Best options to save for your child’s higher education
    • 1. Coverdell Education Savings Account (ESA)
    • 2. 529 plans
    • 3. UTMA or UGMA plans
    • 4. Involve your children
    • 5. Include the possibility of scholarships
    • 6. Take Advanced Placement classes
    • 7. Be realistic with your dreams
    • To sum it up

7 Best options to save for your child’s higher education

1. Coverdell Education Savings Account (ESA)

An education savings account is one of the most common saving methods used by parents. You can save up to $2000 every year for each child in an ESA. This means if your parents are putting in $1000, you can contribute another $1000, as long as the total amount doesn’t exceed $2000. The interest in an ESA is higher than a savings account. The biggest benefit of having an ESA is that your withdrawals are tax-free. However, keep in mind that ESA money can only be used by the beneficiary up to the age of 30. 

2. 529 plans

529 plans are a great way to save up for your child’s education and yet, unfortunately, aren’t so popular. A 529 plan offers tax-free growth and withdrawals. Different 529 plans come with different fees and operating costs, so it is good to research thoroughly before you finalize a plan. 529 plans can also be used by grandparents, but make sure you take a plan that is easy to manage. 

Another feature of the 529 plan is the prepaid option. The upside of the prepaid plan is that you can buy tuition credits at a college of your choice at the current fees and not have to wait until your child goes to college. This is a great way to combat inflation but can be tricky if your child decides to go to another college. Discuss such options with your children before taking them up. 

3. UTMA or UGMA plans

UTMA or Uniform Transfer to Minors Act and UGMA or Uniform Gift to Minors Act, are both custodial accounts or trusts that you can set up for your child. These accounts cover more than just college fees and can be used for any other expense by the beneficiary. Custodial accounts can be used to save bonds, stocks, and liquid cash for your children. UTMA and UGMA accounts can be set up in your child’s name but need a custodian like a parent or a grandparent till your child turns 21. But be careful when setting up a UTMA or UGMA account, because once the beneficiary turns 21, it is solely up to them how they want to use this money. If your children are spendthrifts or likely to misuse the money, then this may not be the best option for you. Apart from investing your money in these investment vehicles, there are several other things that you can do to save up for your child’s higher education:

4. Involve your children

If your children are now teenagers and old enough to work, let them contribute to their college fund. Not only do part-time jobs help in funding their education, but they also make for great additions to their college essay! 

5. Include the possibility of scholarships

If your child excels at sports, co-curricular, academics, etc., encourage them to apply for college scholarships. Scholarships can significantly reduce the load of financial expenses from a college education. 

6. Take Advanced Placement classes

AP classes are classes that children can take in high school and earn credit for college. The AP class your child takes in high school is one less class they have to take in college. It is not advisable to burden your children with additional classes. However, if they have extra time, you can talk to the school’s academic counselor and have them enrolled in some of these classes. You can also discuss the options of dual credit at your child’s high school. 

7. Be realistic with your dreams

Not all scholars or millionaires graduate from Ivy League colleges. If you are not able to meet a particular college’s tuition, opt for a community college that has a lower tuition fee. You can later transfer these credits to the college of your choice. 

To sum it up

As they say, the roots of education are bitter, but the fruits are sweet! Saving up for a child’s education fund can seem challenging, but it is not impossible and surely comes with many long term rewards. With the right goals and techniques, you can steer through and give your child the chance to get the education of their choice.

Are you struggling to meet the goals you set for your child’s education? Reach out to financial advisors. They are skilled enough to help you save your money in the most appropriate education fund account. 

TagsEducationEducation PlanningFinancial Goalsfinancial planningHigher Education
Previous Article

All You Need to Know About Portfolio ...

Next Article

Deciding What to Do with Your 401(k) ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0
WiserAdvisor Insights

WiserAdvisor Insights

A team of dedicated writers, editors and finance specialists sharing their insights, expertise and industry knowledge to help individuals live their best financial life and reach their personal financial goals. We believe that there is no place for fear in anyone's financial future and that each individual should have easy access to credible financial advice.

Related articles More from author

  • Financial-Literacy
    Personal Finance

    Tips to Improve Your Financial Literacy

    January 5, 2020
    By WiserAdvisor Insights
  • College-Education-savings-plan
    Education PlanningRetirement Planning

    Here’s How You Can Prepare for Your Children’s College Education While Saving for Early Retirement

    March 2, 2020
    By WiserAdvisor Insights
  • Are-you-saving enough
    Personal Finance

    Are You Saving Enough?

    November 3, 2019
    By WiserAdvisor Insights
  • Financial Goals
    Financial Planning

    7 Ways to Stay Frugal to Achieve Your Financial Goals

    December 17, 2020
    By WiserAdvisor Insights
  • Financial-Goals
    Financial Advisor Guide

    How a Financial Advisor Can Help You Define Your Financial Goals

    January 14, 2021
    By William Hayslett
  • Deferred Annuities
    Financial Planning

    All you Need to Know Regarding Deferred Annuities

    December 22, 2020
    By WiserAdvisor Insights

You might be interested

  • financial planning DIY-Checklist
    Financial Planning

    How to Prepare an Annual Financial Plan – Financial Planning DIY Checklist

  • Roth-IRA
    Retirement

    Can You Open a Roth IRA After You Turn 60?

  • Roth-IRA-Vs-529-Plan
    Education Planning

    Roth IRA vs. 529 Plan for College Funding

Don't miss out! Get our Helpful Financial Tips Newsletter

  • Popular Posts

  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020
  • retirement-accounts

    Choosing the Best Retirement Accounts

    By WiserAdvisor Insights
    July 8, 2019
  • Retirement-Planning

    Retirement Planning checklist

    By WiserAdvisor Insights
    July 8, 2019
  • Why investing for goals is the right way of investing

    Why Investing for goals is the right way of Investing?

    By WiserAdvisor Insights
    July 16, 2019
  • Portfolio diversification

    5 Dangers of Over-Diversifying your Portfolio

    By WiserAdvisor Insights
    July 26, 2019
  • Financial Planning for couple

    The Complete Guide on Financial Planning for Couples

    By WiserAdvisor Insights
    August 1, 2019

Categories

  • Business Finance (2)
  • Education Planning (29)
  • Estate Planning (20)
  • Financial Advisor (1)
  • Financial Advisor Guide (26)
  • Financial Planning (108)
  • Financial Trends/Government (2)
  • Investment Management (53)
  • Personal Finance (9)
  • Portfolio Management (1)
  • Retirement (7)
  • Retirement Healthcare (1)
  • Retirement Planning (79)
  • Retirement Plans (1)

WiserAdvisor is America’s oldest and largest independent network of screened financial advisors. We make it easy and convenient for consumers to find and connect with advisors in their area. We have successfully helped over 100,000+ individuals find their best financial advisor since 1998 with no match fees, no commitments, no obligation, and complete confidentiality. WiserAdvisor has been featured in The Washington Post, The Washington Journal, ABC, CBS, Yahoo and has been seen in numerous other leading financial news and information websites.

Follow Us

  • Recent

  • Popular

  • 5 Ways You Can Maximize Your 401(k) Retirement Account

    By WiserAdvisor Insights
    May 17, 2022
  • Pros and Cons of a Roth IRA Conversion

    By WiserAdvisor Insights
    May 13, 2022
  • Financial Planning for Professional Athletes

    By WiserAdvisor Insights
    May 9, 2022
  • The benefits of working with a financial advisor - WA

    The benefits of working with a Financial Advisor

    By WiserAdvisor Insights
    July 16, 2019
  • Financial-Professional

    How to prepare for a meeting with your Financial Advisor

    By WiserAdvisor Insights
    July 8, 2019
  • Do's & Don't investment portfolio

    The Dos and Don’ts to Protect your Investment Portfolio in a Bear Market Amid The ...

    By WiserAdvisor Insights
    April 22, 2020

Contact Us

Corporate Headquarters

12150 Monument Drive, Suite 700
Fairfax, VA, 22033

Business Hours

8:30 AM – 5:00 PM EST (Monday – Friday)

Email Address

wa.assistance@wiseradvisor.com

Phone Number

(703) 651-2060

Fax Number

(703) 259-4487

  • Privacy Policy
  • Terms & Conditions
© Copyright 2021 WiserAdvisor.com. All Rights Reserved.

Add WiserAdvisor - Blog to your Homescreen!

Add