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As college becomes increasingly expensive, financing tuition is a problem many parents are faced with. Fortunately, planning ahead and making smart investments can help your kids go to college without taking on excessive debt. Here are a few do’s and don’ts to help you build a college fund. 

Do:

Utilize a savings plan.

Something as simple as setting up a separate savings account that you contribute to regularly is a good first step. Additionally, consider plans like a Roth IRA or a 529 college savings plan. The investment earnings in these plans are not taxed, giving you the potential to generate more money than a normal savings account.

Start early.

Financing your child’s college education will be easier the earlier you get started. It will take time to build up the savings, so start putting money away in your 529 plan as early as possible. Financial advisors recommend the $2,000 rule: multiply your child’s age by $2,000, and this is how much you should have saved to be “reasonably confident” that you’re on track to pay for two years at a four-year, in-state public university. 

Pick the right school.

FinancingTalk to your child about their career goals and look for schools that align both financially and academically. Depending on their goal for the future, picking an in-state college is a more economical choice than attending an out-of-state private institution. 

Don’t:

Ignore other financial obligations.

You shouldn’t ignore other financial responsibilities just to save money for your child’s tuition. Ignoring your own financial obligations, such as putting money away for retirement, will hurt the family rather than help in the long run.

Assume your money will grow.

Monitor any Roth IRA or 529 college plan as they are tied to the performance of the stock market, which can fluctuate. If you don’t, you might be in for an unpleasant surprise when you discover the account doesn’t have as much money as you thought it would.

 

Following these helpful tips is a good start to ensure financing your child’s college education is feasible, but sometimes it helps to have professional help. To make sure you’ll be ready when the time comes, contact the professionals at Citizens Bank in Byhalia, MS. Serving northern Mississippi since 1919, this local bank can help with all of your personal financing needs, including checking and savings accounts, mortgage options, and business loans. Learn more about these offerings online or call (662) 838-2146 to speak to a friendly member of the team today.
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