With the escalating costs of a college or university education, it is important that families interested in higher learning know how to instruct their children in ways to save for college. There are steps that can be initiated from the time that a child is very young up until that child is ready to attend college or university.
If you haven’t already, start an education savings plan for your children, which is called a 529 Plan. The plan is arranged to help families set aside funds for college costs in the future. It takes its name from Section 529 of the Internal Revenue Code, which instituted these types of plans in 1996.
Whatever has been set aside in savings, either through a 529 Plan or general savings, let your children be part of the picture by encouraging them to match their funds with yours. Give them the incentive to save whether it’s through literary related contests, odd jobs, savings bonds or other miscellaneous activities. Matching is a great inspiration for kids to be part of their own college plans. Also, let your children review statements of their 529 plan, so they can see just how their matching contributions have been compiled over time.
When you get involved with a 529 Plan, your state might offer a matching grant program. A state plan will match money that is deposited into an account by parents or children. This is another chance for your children to participate in the process.
Scholarships are another way for a child to contribute towards a college savings plan. Encourage your child to apply for various scholarships that are relevant to his or her areas of academic interest. Maybe their interests lie in communications, teaching, healthcare professions, business or computer science. Whatever path they take, let them research what scholarships are available in those areas. A partial or full scholarship that is awarded to a student in his final year of high school is another way a child can help offset college costs.
Every child needs to understand financial responsibility. Present your children with an outline of your family’s budget and monthly expenses. Explain what it costs to live today. Present facts and figures in black and white, such as automobile upkeep costs, house or rental payments, insurance costs, utility costs, and other expenses. These kinds of explanations will help children make better career choices where there is sufficient income potential to support themselves and a future family.
Teaching your children to save for college should be a learning experience. Once they understand the responsibilities that saving involves, they will be better able to make the right decisions concerning a career path and how to deal with life during college and after graduation. Saving money for college will become a reality rather than something that is supposed to automatically happen.
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