If you want to give your child the opportunity to attend the college of their choice in the future, to pursue one of their passions, it is important to learn how to build a college fund for your child. As college tuition is extremely expensive and if your child has a college fund, they won’t get into debt, work long hours at a part-time job, or compete for a small handful of scholarships, in order to attend college and focus on their studies.
Open a registered education savings plan:
You may not know that you can open a registered education savings plan for each of your children. The reason why it’s a wise move to open a registered education savings plan for your child is that all the contributions which are made to this account will be tax-free. This means that it will be easier to save tens of thousands of dollars for your child’s future college education before they graduate high school.
One of the secondary benefits of opening a registered education savings plan for your child using their social insurance number and your social insurance number is that other individuals are able to make tax-free contributions to the account which you open. As an example, your child’s grandparents may be interested in contributing funds towards their grandchild’s college education.
How much can be saved in a registered education savings plan? Currently, the maximum amount that can be saved in a registered education savings plan is $50,000. Which will cover a large amount of your child’s college tuition costs.
Create a monthly budget:
One way to build up your child’s college savings quicker is to create a monthly budget, in order to cut frivolous expenses from your budget, so that you can save more money for your child’s education. Especially, if you have multiple children or plan on having multiple children and need to save to send multiple kids to college.
Start saving as soon as possible:
To take advantage of interest and compound interest, it’s a great idea to start saving for your child’s education, as soon as possible. So that the money that you deposit can grow over time. Ideally, you should start saving for your child’s college tuition as soon as they are born.
Invest some of your income into a diversified investment portfolio:
It’s also a great idea to invest some of your income into a diversified investment portfolio. Especially if you’d like to be able to give your child more than $50,000 towards college and want to be able to help pay for your child’s living costs while they focus on studying. While college students can get a part-time job to pay for living costs, this time could be more wisely spent on studying and enjoying a well-rounded college experience.
So if you want to learn how to pay for your child’s college education, it’s well worth using all the tips that are listed above to start saving for your child’s college years. As they will sneak up on you, faster than you expect.