3 Simple Strategies That Can Help You Save for Your Child’s College Education

Tuesday, July 25, 2017

When it comes to setting money aside for your child’s college education, most financial experts agree – there isn’t a one size fits all solution to saving. After all, what might be right for one family may not work for another.

Girl With Piggy Bank Adams Istock

With that said, there are some basic strategies just about every family can employ. Here are just a few:

1. Start early.

You may not think it’s feasible to begin saving when your child is first born, especially with all the things a new baby requires.

But if you start early, saving even a small amount, you’d be surprised how quickly that money will grow through the magic of compound interest. What’s more, if you use a tax-advantaged savings account such as a 529 plan, you can retain even more of your money over the long run.

2. Use the ‘2K Rule of Thumb.’

Wondering how much you should be saving? According to the “2K Rule of Thumb” – a new guideline for saving – parents can use their child’s age for a quick estimate.

Here’s how it works: multiply you child’s current age by $2,000. The answer should give you a rough es-timate for how much you should have saved for your child’s college education at that point in his or her life.

So for example, if your child is 6 years old, the rule says you should have about $12,000 on hand.

But again, these aren’t hard and fast rules but merely guidelines to help you get started.

3. Take advantage of 529 plans.

These tax-advantaged college savings plans offer a leg up for those trying to save. The money you save isn’t taxed as it grows. And when you need the money for college expenses, you can withdraw those funds tax-free.

And with a Future Scholar account – South Carolina’s 529 plan – you may be eligible for additional tax savings if you file a South Carolina tax return.

“A Future Scholar plan really is the smart, easy way to save money for college,” said South Carolina Treasurer Curtis Loftis.

For more strategies and secrets to saving for college, read on: https://www.nytimes.com/2017/07/16/smarter-living/college-savings-529-plan.html

To open a Future Scholar account, visit www.FutureScholar.com.

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Interim Media Contact:
Edward Frazier
edward.frazier@sto.sc.gov
803.734.2016

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