Three Ways to Secure Your Child’s College Fund

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Setting up a savings account for your child can seem a little silly at the beginning. However, as gifts come in from relatives and family friends for birthdays and special events, helping your child understand the power of putting away some of his or her money every time they receive it can be a powerful tool they can use in adulthood.

Make It Theirs

Setting up savings in your child’s name is a great way to protect their money and help him or her understand the power of savings. As your child gets older and starts to understand the power of money, help them to also grasp the power of savings as a way to earn interest and build toward large purchases and investments, such as college tuition. Keeping the money in their name is a great start for children’s first bank accounts.

Watch Your Credit

An easy way for your college-age child to get a loan is to cosign for them. They can generally borrow at a much lower rate if he or she has a stable cosigner with great credit. This means that you need to keep an eye on your score. If you hit a rough financial patch and need to do some catching up, it’s a good idea to look into a credit repair service or to meet with an attorney. Keeping an eye on things early helps you notice any mistakes on your credit score before you need to worry about a student loan. Frequent checking of your credit score is also a good idea if you plan to make any empty-nest changes or purchases when your child goes off to college to make sure your financial records are accurate and secure.

Consider Setting Up a Trust

Make an appointment with an attorney to set up an educational trust for your child’s college savings plan. Such a trust will keep the money out of both of your names if it needs shielding at any point in your lives. In addition, 529 plans make it easy for you to get money invested in stocks for bigger gains than you’ll get from a savings account. Of course, stock investments can be risky. Be sure to dial back the risk as your child gets closer to college age. Once your child reaches the age of 12, focus on protecting the investment rather than growing it. There are tax savings available with the 529 plan, so plan to discuss this option with your tax professional. 

When should you start saving? As soon as possible. Your student may qualify for scholarships and tuition breaks, but the security of a college savings plan gives your child options to explore many different schools.

Are you struggling to build up your savings? Get started with these savvy tips.