There are many incredibly important things that parents do in their children’s lives. One thing they do for their kids is to save for college education. College can be terribly expensive, sometimes more so than the most responsible young adult can handle on his or her own. There are three main ways that parents can save money to help their children with college expenses.
Most common among parents who are saving for their kids’ educational futures is the idea of generalized saving. These parents often save money in a checking or savings account. The money may be put into the account at any time the parents have extra, in whatever amount is convenient at the time.
This is perhaps the simplest way to save, but it does have a drawback that the over two types do not: taxes. Checkings and savings are both taxable accounts, meaning savers will have to pay part of what their investment earns.
Occasional 529 saving
529 accounts are a relatively common and effective vehicle for college savings. The benefits of a 529 account are many, from deductible contributions to a low impact on your child’s financial aid eligibility.
Parents who do occasional 529 saving have the best of intentions but are often unable to follow through for the best results due to only inconsistently adding to the savings account.
Consistent 529 saving
College savers who are financially stable and disciplined can do consistent 529 saving. This means setting aside a set amount every set period of time. Parents who consistently add to a 529 account are most able to help their college-bound children.
Any type of saving is better than none. However, the savings account parents choose to use can make a critical difference in how much they have to help pay college expenses.