If you save for college education for your children in your own accounts or to savings plans in the name of each child?
to start saving for college can seem daunting.
You must decide how to save, how much to save and how to invest. You can choose a tax-deferred plan or any other investment.
Before you get well, however, the first thing you must decide is whether you want to save your own name, or the name of your. Children
Here are some pros and cons to consider when saving for college education for your children:
3 reasons to education savings on behalf of your child
1. College savings in their own name helps children participate planning and preparing for college.
Teenagers may put part of the earnings and cash donations in education savings to help it grow faster.
contribute to the college savings themselves gives them a stake in the project. A child who knows he or she wants to go to college, and works hard to help save money in advance to do so is more likely to work hard after the start of classes.
2. The money is under the control of the child.
Depending on the type of savings, the child may decide to use it for a cause other than the university, such as buying a house or start a business.
In addition, if you intend to be some savings for a child, and something happens to you, the savings are already his.
3. Your child is probably in a lower tax bracket than you are.
Up to $ 2,000 is taxed interest or other unearned income a child at a lower rate of the child.
4 reasons to keep college savings in your own name
1. Saving the child's name can reduce their eligibility for financial aid.
This is the most frequently cited reason for not putting savings in the child's name.
Where financial assistance is calculated, a higher percentage of children's goods are considered available to pay for tuition. This is generally true even for custodial accounts that you keep for your minor children.
2. You may not want the money to be under the control of a young person.
Not everyone is able to make the wisest decisions age 18 or 21. If you help your child to save money for college, and he buys a new car instead of attending university, then?
3. You can use other methods of saving for college.
You can start a side business, invest in real estate, improve your own career skills, or take other non-traditional ways to prepare to help your child to 'university.
4. Life is full of surprises.
If you put money in the name of your child, it is theirs. You can not borrow from the savings account.
things if you lose your job or suffer any financial crisis and you do not have an adequate emergency fund, you may wish you had kept flexible.
even if you do not need the money, you may want more options later.
For example, if you have more than one child, the two may not need the same amount of money for college. A child can go to community college, while another goes to law school
Photo credit :. Leo Hidalgo (@yompyz) via photopin cc
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