How To Start A College Fund
Parents of children often begin to worry about how they will be able to afford the college education of their child and wonder whether obtaining student loans is the only option available to them. Student loans are easily available but they can put a debt burden on the student. Parents may find themselves in a better position to decide to conduct some research and try to understand how to start a college fund.
One option that parents should be looking at is the 529 college savings plan which will be appropriate for their requirements. Student loans despite being available are not the perfect option for parents who may not want their children to be burdened by debts. Planning in advance and preparing for the college education of their children will give the parents an opportunity to set finances aside to start a college fund. The 529 college savings plan is a perfect platform which the parents should be utilized because they can save a significant sum of money by making an early start and saving as much or as little as they can. Let us understand how a 529 college savings plan can help parents to serve the funds required for the college education of their child.
Planning in advance and preparing for the college education of their children will give the parents an opportunity to set finances aside to start a college fund. The 529 college savings plan is a perfect platform which the parents should be utilized because they can save a significant sum of money by making an early start and saving as much or as little as they can. Let us understand how a 529 college savings plan can help parents to serve the funds required for the college education of their child.
Investing in a 529 college savings plan
The 529 college savings plan is named after a section of the Internal Revenue Code under which it was created and the plan allows people to save money for college education. The money saved will accumulate interest and can be withdrawn tax-free when it is being used for expenses related to education. Some 529 plans do not have any minimum dollar requirements and allow families to save as little or as much as they possibly can.
Parents who are accustomed to paying for everything in cash and save the small change and deposit the money in their checking on to be transferred to the 529 plan. As no minimum dollar requirements have been stipulated parents can decide to save just five dollars every week and rest assured they will save a significant amount over the course of the year. They will also have an opportunity to earn some interest which will again add up to the principal.
Choosing a 529 plan that is uncomplicated
Parents are advised not to choose a complicated 529 plan which offers great returns but to look for a 529 plan that has investment options suitable for individual requirements. Investment options that are age-based are excellent for account owners who may not want to manage the funds in their account.
Saving systematically and within the budget
Experts have provided an opinion that setting an automatic monthly deposit into the 529 plan is a convenient method for parents to remember they have set money aside for the college fund. However, it must also be noted that people may come across financial hardships and may not be able to meet the commitments they make every month. The experts have stated that parents should consider an amount they can afford according to their sources of income. The option of setting aside extra money whenever possible is anyway available for parents who have decided on a 529 college savings plan.
State benefits also available for 529 plans
Parents are advised to conduct some research and understand whether the 529 plan offered by the state where they are residing is offering any incentives because some states offer tax benefits to any plan in the country. According to information provided by experts, state benefits can be close to nearly $1000 every year.
When parents decide to invest in 529 college savings plan they are only required to pay income taxes on the money they invest in the plan. The earnings on this investment are exempt from income tax even when the money is withdrawn to pay for college education.
Parents who decide to start a college fund and save money over an extended period of time will find they are getting tax breaks to the tune of thousands of dollars. This is one of the most lucrative tax incentives for people and one which can save them a huge amount of money. The 529 college savings fund is an investment plan for people who do not know how to start a college fund.
More in Investments & Savings
Brangelina No More – Pitt and Jolie are Now Officially Single
It seems like it was only yesterday when news of actors Angelina Jolie and Brad Pitt seeing each other was announced to...May 23, 2019
All you Need to Know about Jeff Bezos’s First Public Outing with Girlfriend Lauren Sanchez
When news broke about the impending divorce of Amazon founder Jeff Bezos from Mackenzie Bezos, many speculated that a third party...May 22, 2019
The Cute Story of How Prince William Finally Got Serious About Kate Middleton
William and Kate Middleton, Duke and Duchess of Sussex may appear to be the perfect royal couple, but there was a...May 21, 2019
According to Oprah, Anybody can Relate to THIS Thing that Prince Harry Does
Those who have witnessed the late Princess Diana’s parenting techniques would remember how she tried her best to let her kids live...May 20, 2019
This is the Reason Why JLo is Not Planning Her Wedding Just Yet
Jennifer Lopez and Alex Rodriguez were engaged in March, but the pressure is on the singer-actress to set a date for the...May 17, 2019
Adele and Husband Simon Konecki Announce End of their Three-Year Marriage
After seven years of being together, Adele and husband Simon Konecki are calling it quits. Of these seven years, the couple had...May 16, 2019
Chrissy Teigen Talks about How She Teaches Her Kids to ‘Give Back’
Chrissy Teigen is very active on social media, which makes her an easy target for detractors, especially the ones who question her parenting...May 15, 2019
You Won’t Believe who Jennifer Lopez and Alex Rodriguez Went Out on a Double Date with
When you see Jennifer Lopez and Joanna Gaines together, your first thought would be that the latter is a great fan...May 14, 2019
Queen Elizabeth’s Gift to Kate Middleton on Her Wedding Anniversary is Like No Other
Parents-in-law normally do not usually give out presents to their daughters-in-law or sons-in-law during wedding anniversaries, especially when it’s not a...May 14, 2019