People of Miami

Starting a College Fund for My Kid: What Do I Need to Do?

A college fund can be a gamechanger if you plan for them correctly and start early

Starting a college fund for your child’s educational future is one f the best decisions you can make for your child’s future and your own financial stability. Rather than scrambling after loans worth thousands of dollars or selling off assets to make tuition fees, a college fund gives you time and space to save up over the years and hand your kids something they’ll truly benefit from.

Plus, it also opens up a lot of opportunities, and while it may not cover all of their expenses, any financial assistance is a blessing. But where and how do you begin starting a college fund? Here are some tips and insights:

Decide how much you can contribute

It’s important to be realistic about how much you can realistically contribute to their fund and what is manageable for you in the long run. Understand that a college fund isn’t the only expense you’ll have or the only way your kids will be able to get through school, and it’s important to know what other options are available to them and you.

Adjust the expected cost of college

However, whatever amount you do set, adjust it for inflation and come to a round figure for what college will cost by the time they’re in school. Inflation changes the cost of education by roughly 5% each year, so you might have to adapt the amount accordingly.

Find what savings model works for you

Next, find a savings model that works for you: a savings account, mutual funds, or a 529 Savings plan, knowing which form of savings and accumulation helps you collect funds safely. Some options may get you tax breaks, while others may be easier to manage, such as savings accounts, which require very little management and can automatically transfer payments into them.

A college graduation ceremony with a robed student with his back to the camera.

Look into state support for education plans

Every state offers some form of financial remuneration or support for students and their families, and it helps to know what your state’s policies are. Knowing this will allow you to make decisions regarding the amount and type of fund you set up and the additional support, tax breaks, and interest that come your way.

Start saving as early as you possibly can

A lot of parents are confused about when to start saving for their kids to go to college fund, and the simple answer is: as early as possible. You should start while they’re young, either already in school or in early childhood.

Starting early gives you the headstart you need to save up without feeling pressured to do so. It also gives you enough time to manage your finances on the whole and sort out other expenses, debt, and loans, while focusing on financial stability and growth for yourself.

It’s tough but very much achievable with the right planning and considerations. It’s vital that you focus on it from multiple angles and aspects, and you do what’s manageable for you.

Check out more financial advice and recommendations through Calle Ocho News as we continue sharing important news and information. We’re covering key issues, happenings, updates, as well as fun things to do in Miami, seasonal activities, and much more. Subscribe to our newsletter for the latest news, events, and much more from across Miami-Dade.

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