Smart Ways To Save For College

The average cost of tuition in the United States for a four-year university is $10,000 per year. This cost does not factor in room and board, campus activities, or other expenses that can arise for your student. Establishing and contributing to a college savings account for your children at a young age will help build wealth for their education over time. The financial experts in St. Louis have compiled a list of smart ways to save for your children’s college fund. We know that you may not be emotionally prepared for this major step in your kid’s future, but Bogetto & Associates wants to help you be financially prepared for your child to go to college.

Establish a 529 Savings Account

A 529 plan is an education savings plan operated by a state or educational institute established to help families set aside funds for college costs in the future. In most cases, your choice of school is not affected by the state in which you create and build the 529 savings plan. This type of savings plan works much like a 401(K) or IRA by investing your contributions over time into a mutual fund or similar investment. A 529 plan will offer several investment options to choose from to match your style of savings.

Create a Brokerage Account

A brokerage account is a taxable account you can open with a stock brokerage firm. The convenience factor of linking this account to your checking or savings account makes for an easy transfer of funds. You can use the money in the brokerage account to buy and sell many different types of investments; common stocks, bonds, mutual funds, and real estate investment trusts are just a few of the investment vehicles that can be utilized through a brokerage account. 

Consider Prepaid Tuition

A prepaid tuition allows funds to be contributed into an account set up based on today’s tuition rates. Locking in the current rate of higher education is a major benefit of this type of savings account for college. Tuition rates rise every year, if you are able to lock in rates for your child now, you have the opportunity to save big on their college expenses. This is a great way for parents and grandparents to add money over time into a child’s education fund.

Start a Roth IRA

A Roth IRA can be used as a savings tool for college education expenses. Some parents use this method as a combined college and retirement savings fund. Many times IRA withdraws are exempt from withdrawal penalties if the funds being taken out are specifically used for qualified educational expenses. Funds remaining in the Roth IRA after education expenses are paid can be left in the investment vehicle for retirement.

College is a major expense that many parents face. As a parent, you want to provide for your child and give them the best shot at a bright future. Preparing yourself financially for your child’s college education can help make this emotional time easier for a parent. The trusted financial advisor team in St. Louis is here to help you make the college saving process less stressful by providing different options to help save for your child’s education. 

Sources:

http://money.usnews.com/money/personal-finance/articles/2011/02/02/5-smart-ways-to-save-money-for-your-children

http://www.bankrate.com/finance/savings/3-ways-to-save-for-your-child-s-future-1.aspx

http://time.com/money/4196687/alternative-college-savings-529/

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Telephone - 314-858-1602

Email - peter@bogettoandassociates.com

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St Louis, MO 63127

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Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC

Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.