An article by BudgetQueen
All the planning, scrimping and saving is great, but remember that you are not the one who will ultimately be in charge of this kid’s future – he or she will be. I have spoken to some financially-strapped parents that have given me some great ideas on how they plan to tackle planning for college for the kids, while encouraging his or her kid to be responsible as well. Look through each and find what may work for you. You may even have a better idea of what is best for you and your family – if so that is great! But combine it with a few other ideas and you can be stress-free.
Here are some of the best ideas from parents of college-bound students….
Chapter 1. Refinance to advance
One family refinanced their house so that the mortgage payments end when the kids go to college. That way the family doesn’t have to worry about house payments while the kids are going to school, and instead can focus on helping the kid with tuition.
Chapter 2. “We will pay for in-state”
This family’s kid could have gone to an Ivy League. But to be fair to the other kids in the family, who each went in-state, the parents agreed only to pay for what they would have paid if he went in-state as well. Any other money he would have to make in scholarships and student loans.
Chapter 3. Pay for A’s
This family pays $100 dollars for all A’s in junior high and high school. They know that studying hard pays off in college and the real world and they want to show the kid that he is rewarded for doing well. This family also wants to continue the same process in college: paying them for when they do well (B’s may be forgiven).
Chapter 4. Subsidize
As the kid does something smart toward school, one family pays him or her for it. Like the A’s, the money that you make from after school jobs helps go to college. One family matches dollar for dollar the portion that his or her student puts away in a fund such as a money market account that allows you to build a nice savings account as you are able to earn a higher interest rate from most accounts.
Chapter 5. Dedicate investments and bonuses
Chances are that you have investments somewhere, or will get them in the future.
One family decided to dedicate the Roth IRA to college instead of retirement. The taxes have already been paid and the money has already been invested (on a Roth, there is no penalty on withdrawal of the contribution, although there is a penalty for early withdrawal on the earnings if you are under 59.5 years of age).
Or, dedicate all or part of the bonus you get every year at your job toward college tuition.
Now it is up to you….research the programs. Every 529 is different depending on the laws of your state. If you don’t have money saved now, make a date for when you can start contributing. If it is all you can afford, sometimes just a little is all you need to make. Be supportive. Talk about it with him or her. Be involved. It will be one of the most important investments you will ever make.