Education Savings Account

Creating an education savings account for each of your children while they're young will be a tremendous help when it comes times for your teenager to begin college.  With the rising costs of education and inflation, the amount you save may not cover the total amount needed, but it will certainly be of some help when your teenager(s) are ready to enroll in college. 

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Planning Ahead...

When it comes to getting a college education, financing is one of the most important considerations that you will need to make. Unfortunately for far too many parents it is one of the last considerations that is made when it comes to the educations of their children.  This is not so much because of not caring about their children's futures, but because so many parent's have to struggle financially just to get by with the day to day expenses.

If you are a parent you owe it your child and yourself to plan ahead and plan carefully in order to cover the cost of your child's education. I realize this sounds presumptuous, but with careful spending, there are a few great ways in which you can do this.

The most common is to begin by opening up an education savings account for your child (under the age of 18). When you open up an education savings account, you can contribute up to $2,000 per year per child. This is a combined total contribution however, and it does include the contributions of grandparents, friends, and family in addition to your own personal contributions. The money from these funds can be withdrawn tax-free as long as they are used for educational purposes.

Educational expenses in this case include books, tuition, fees, supplies, and college room and board provided that your child is at least a part-time student. 

If you do not use all the funds for your child there are options as far as what to do with the remaining funds in the account. The first option would be to leave the funds in the account and allow the account beneficiary to withdraw them up until the age of 30. There is a penalty involved and the beneficiary will be required to pay income tax on those funds. You could also elect to roll those funds over to the next child under the age of 18 who will have educational expenses in the future.

The money you set aside in an education savings account to cover the cost of the education of your child or children is not tax-deductible, but it is a great way to begin saving money and investing in the future of your child. 

More Education Savings Account Benefits

You can sign up for programs like Upromise in order to subsidize your contributions with donations from corporate sponsors as their way of thanking you for buying their products or using their services on any credit cards that you, your friends, and your family members have registered to go into your child's education savings account. 

Every edge you give yourself when it comes to investing in the education of your children is an edge worth having. College tuition rates are rising at an alarming rate while corporate expectations of college degrees are rising at the same near lightening speed. This means that a college degree is more critical for our children than in any past generations.

Take the time now to check into securing the future of your children by establishing an education savings account. Let friends and family know that any gifts they are planning to give your children that involve money would be appreciated if they instead invest in the future of your children rather than buying gift for the future.  

You can also ask your friends and family to sign up their credit cards with Upromise in order to provide a little bump in donations to your child's education savings account. These little steps add up to significant savings over the course of 18 years. You just might find that the investment you are making is adequate to cover the costs of your child's tuition in full.  It will at least be a good suppliment to Pell grants, students loans and scholarships.  

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Education Savings Account and all associated materials and related studies are the complete work of the site's author, Margaret Lukasik, and cannot be copied by any means without her express written permission.