Important to start saving for your child's college fund now

Paying for an education in the United States is no joke. That’s a blunt way to put it, until you realize the average annual cost of attending school at a private college, according to collegedata.com, is $47,831 and $24,061 at in-state public colleges.

Multiply either amount by four years and you have total that’s more than enough to buy a home in some parts of the U.S. or a high-end luxury vehicle.

Unless you’re saving for a very, very long time or have the income to support it, you’ll need to start saving when your child is in diapers to pay for his or her college education. Preparing for the big bill now won’t leave you scrambling later when you realize it’s too late. Here are two major savings account to help set up your child’s future:

Coverdell Education Savings Account (CESA)

Available at Travis Credit Union, a Coverdell account allows you to save for college with tax-free withdrawals. Available to students age 30 and under, it also earns dividends in addition to tax-free earnings and distributions. The minimum opening deposit is $200 and the account may be withdrawn until the beneficiary reaches 30. The interest rate of the account is fixed until maturity, with terms from 12 to 60 months available. For more information, visit our College Savings account.

529 savings plans

A 529-savings plan is a state-sponsored educational savings account that allows a person to save for tuition and fees for at an in-state college. Room and board won’t be covered by the plan. The plan is sponsored by the individual state and managed by a separate plan manager. In this case, TIAA-CREF is the plan manager for the state of California. For more information on 529 savings plans, visit scholarshare.com.

 

Collegedata.com College Savings ScholarShare.com