You can start saving for your college by putting some of the money you earn, or receive for your birthday, into your bank. You can ask your parents what you can do around the house to earn money for your savings bank. Here are some ideas that you can do, but always discuss this with your parents since they are the ones that will be paying you.
- clean out the basement
- clean out the garage
- wash the dog
- clean the bathroom
- cut the grass
- rake the leaves and put them in a recycle bag
- plant flowers or a garden
You can also have a bank where everyone in the family puts their daily change and this can go towards your college savings.
I am sure you can think of many other things that you can do around the house to help your parents, so please share your ideas on our blog.
Parents should think about opening a "529 Plan" and start saving a set amount of money every month through automatic deductions from their bank account. Starting when your children are small and following this plan can save money that would probably just have been spent without a thought. Putting $100 a month into a 529 Plan over several years can really help pay for tuition, books, or room and board. By the time your kids go to college you could have possibly saved enough for their first years tuition or even enough for all four years.
Wouldn't it be wonderful if your children could walk out of college and not start out with debt from loans, because they had no savings? No one wants to start a new job and have student loans of possibly $60,000, $80,000 or more. Once you start a month savings plan it is very easy, and you won't miss the money; you will be watching it grow.
A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It is named after Section 529 of the Internal Revenue Code which created these types of savings plans in 1996. 529 Plans can be used to meet costs of qualified colleges nationwide. In most plans, your choice of school is not affected by the state your 529 savings Plan is from.
529 Plans are usually categorized as either prepaid or savings plans.
Savings plans work much like a 401K or IRA by investing your contributions in mutual funds or similar investments. The plan will offer you several investment options from which to choose. Your account will go up or down in value based on the performance of the particular option you select.
Prepaid plans let you pre-pay all or part of the costs of an in-state public college education. They may also be converted for use at private and out-of-state colleges. The Independent 529 Plan is a separate prepaid plan for private colleges.
Don't worry if you don't have a lot of money to put into your 529Plan each month, put into it what you can afford. As time goes on you may be able to add more each month. Remember your goal is to help and save what you can afford in small amounts, each month. Any amount that you have saved by the time your child goes to college will help them and you, so don't feel intimidated by the person who tells you that you will need to save $700 each month to pay for college. You should save what you can afford, and get into the habit of saving monthly...
This is a good time for you and your child to sit down and talk about money, college and saving. Make this part of family bonding, and a family goal. Teaching our children at a young age about saving money and the value behind it, might make them become better savers in the future.
Buy Paper Gift Bonds at Financial Institutions
U.S. Savings bonds are another good gift idea for children. Grandparents, parents, or other relatives might want to give a U.S. Savings Bond for a birthday, a new baby, Christmas, or various other occasions.
To buy paper gift bonds:
- Visit any financial institution, fill out the purchase application, and pay the cashier.
- You'll receive your bond within three weeks. If you're making a last-minute purchase, ask the financial institution to mail the bond directly to the recipient.
If you don't know the recipient's SSN, you can use your own SSN. Should this happen:
- Your SSN will appear on the bond. (The first five digits of your Social Security Number will be masked and replaced with asterisks.)
- You'll incur no tax liability.
Series EE U.S. Savings Bond
Series EE U.S. Savings Bonds is an appreciation-type (or accrual-type) savings security issued after 1979. It is a contract between the owner or co-owners and the U. S. government. Under the contract, you, as owner or co-owner, lend money to the U. S. government, and the U.S. must repay that money with interest when the bond matures.
The education tax exclusion permits qualified taxpayers to exclude from their gross income all or a portion of the interest paid upon the redemption of eligible Series EE and I Bonds issued after 1989. The bond owner must use the bonds to pay for qualified higher education expenses at an eligible institution. Find out more about Educational planning, qualified expenses and additonal requirement by visiting Treasury Direct.