How to Start Saving for Your Child's Education

Saving for a college education can be a daunting task. Abby Chao, cofounder of College Backer has great ideas on how to start and how to get others involved.

To learn more from Abby, visit www.collegebacker.com

To get your free $10 match, use this link: www.collegebacker.com/readwithyou

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Abby Chao is the cofounder of college backer, the easiest way to save for college with the help of family and friends. Abby is the daughter of Chinese immigrants and was able to go to college and create a career doing what she loves.

Start Early

Parents should start thinking about funding college when kids are young. When kids are young college can feel far away, and scary. College costs are set to double in the next 10 years. 4 years of a private school can cost $500,000. There are options like scholarships and financial aid, but most families will have to pay some of that. Starting early gets time on your side.

Kids with a college fund are more likely to start college and more likely to finish.

Getting Started

College backer makes it easy for others to share gifts into their college fund. That means for you as a parent that you can get started by using those moments instead of trying to find extra money in the budget. Get other people top start contributing into it.

Asking for Money

People would often rather give the gift of college. It helps parents too. This becomes a meaningful gift. It varies from family to family, but it can be helpful to add a note on birthday invites that says, “If you’re trying to think of gift ideas, we just set up a college fund for our child.”

529 Account

529 Plan is similar to a retirement account but for college. It grows tax-free and withdrawals are tax free if used for education. Even with a full tuition scholarship, it still gives your student a lot of choices.

If your child doesn’t use the money for college, there are a few options. It can be transferred to another child in the family. It can even be transferred back to yourself to pursue higher education. If you use it for non-education purposes, you would have a fee for that withdrawal. On the gift giving side people can feel comfortable knowing that money will go to education. It can also be sued for K12 education.

It is recommended to set up a separate college account for each child. That way, you can tailor an investment portfolio depending on how much time is left. You can also share each child’s link more easily.