Saving Money for Education

Saving Money for Education

07/15/2024
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Saving money for your child’s education can help them and you later.

Most parents want their children to grow up and be smart well-educated individuals. They want them to do well in school and to go on and be successful in whatever career they will choose as they grow into adulthood. Trying to provide the best opportunities for your child to succeed in the future is at the top of parents minds as they teach and provide for their child. This is natural for parents - you want your child to be the best version of themselves.

Generally, in order to become successful in whatever career your child will go into, they’re going to need to get some type of education. While it’s certainly possible to succeed without getting a solid education after high school, it is quite uncommon. Your child may be able to start a successful business, or be a YouTube star, but the reality is that successes are quite uncommon, and we don’t hear nearly as much about the people who spend equal amounts of time trying to succeed at those things but don’t.

In order to get the best education possible, you’re often going to be required to pay at least some out of pocket expenses. While your child may be able to get a scholarship or grant money for their education, there are going to be other expenses. You also shouldn’t rely on your child qualifying for a scholarship or grant money in the future - you have no idea what situation you’ll be in at that point of your life.

Putting aside a bit of money towards your child’s future education can go a long way in helping make the financial burden at that time far easier to absorb. That doesn’t mean that you should ruin your finances right now to save for your child’s future. Instead, if you have the means to set aside money right now for your child, then you should. It doesn’t have to be a huge amount. Every little bit you can save right now will help, even if it’s only $20/month.

You may be saying that there is no reason to save for your child’s education because they’re not going to go to college. However, college isn’t the only education that’s out there, and saving money for education doesn’t mean you have to use it for college. Your child could go to a trade school or a coding school of some type. They could go to some other training program to learn to do what they want. There are so many different options for learning, and there will likely be many more over the coming years that saving money for those educational opportunities makes sense.

There are a few different options for saving money for education for your child in the future. The simplest option is to simply open a separate savings account and to put the money in there as it becomes available. While this certainly works, it’s probably the least ideal way to actually get your money to grow and work for you. Interest rates on savings accounts are quite low, and that money simply isn’t going to grow. It is quite flexible though, and you can take that money out at any time for any purpose without penalty.

The better option to have your money work for you is to put the money into a 529 plan. Each state has options for setting up a 529 plan for educational purposes, so check into what options you have. In general, a 529 plan is an investment account that is specifically designed to save for educational expenses. You put money into the plan, and then you can’t take the money out except for designated education expenses for your child (the designated beneficiary). There are a lot of additional benefits to a 529 plan, but the big downside is that the money has to come out for educational purposes or else you’ll pay a fee to get the money out. However, the benefits far outweigh this negative as your money will grow far faster than in a regular savings account.

Saving for your child’s future education is a great way to get a leg up when it comes time to pay for whatever they choose to do. Even if you can only help to pay for some of their expenses, that’s far better than nothing. Start figuring out how you can save a little bit right now for your child’s future.

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