As a parent, you may wish to create a college fund to pay for your child's continuing education. However, the amounts needed are so large that the project can seem daunting. However, you don't need to be an accountant to start saving. Here are some tips to help you accumulate a healthy college fund for your child.
Tips for Creating a College Fund for Your Child
1. Start Early
The sooner you start, the more successful you'll be at accumulating funds. The longer your investment time frame, the better your results will be because the contribution will start earning considerable interest.
2. Consider a 529 Savings Plan
If you contribute funds to a 529 college savings plan for your child, you can save a considerable amount on taxes. The contributions themselves are not deductible, but funds grow tax-free while in the plan and are not taxable upon withdrawal.
3. Contribute to an ESA
An education savings account (ESA) is similar to a 529 plan, but it limits contributions to $2,000 per year. However, you must meet income limits to qualify, and all amounts must be used by the time your child reaches the age of 30.
4. Make a Plan
Estimate the amount needed for college. Then, figure out when your child will need financial assistance and calculate how much you can afford to contribute each month toward that goal. Even if your contributions and interest won't cover the total amount, it will reduce the amount of debt your student will have to undertake in the future.
5. Work With a Professional
An experienced money manager or accountant can help you reach your goals. They'll keep you on track, suggest investment opportunities, and provide invaluable guidance and advice throughout the lifetime of your savings plan.
For professional financial advice and bookkeeping and tax services, contact Tostrud & Temp, S.C., the most experienced business tax accountants in La Crosse, WI. They have been helping businesses and individuals throughout La Crosse County meet their financial goals for more than 35 years and have a wealth of experience and expertise behind them. Visit their website to connect with them online, or call (608) 784-8060 to speak with an accountant.