The average annual tuition for four years of college is now about $10,740 for in-state and $27,560 for out-of-state residents. Meanwhile, room and board cost about $11,950 a year. If you don’t have a 529 plan, you could struggle to avoid college on your own.
It’s not impossible, though! Here are four options that can help you save for educational expenses. With these tips, you can start saving for college immediately.
Then, you can start receiving your education without worrying about debt.
Start saving for college with these easy tips today.
1. Savings
About 70% of parents intend to cover the cost of tuition in full for their kids. Unfortunately, most are only on track to fulfill 29% of that goal by a student’s freshman year.
About 73% of people begin saving a median amount of $300 a month. Of those saving, 66% have a financial plan in place.
Only 41% are taking advantage of a 529 plan for college savings, though.
Instead, consider using a more flexible savings option. For example, you can choose between a regular savings account or a certificate of deposit (CD).
You’re not obligated to use these options to reap tax benefits. If you choose not to go to college, you can use the funds for other purposes instead. For example, you can start your own business.
CDs offer some returns on your investment, too.
The interest for a savings account is usually lower than other account APRs, though. It might feel more difficult to reach a savings goal quickly as a result.
You also need to remain vigilant about not spending what’s in your savings account.
2. Brokerage Accounts
With a prime brokerage account, you get access to any investment you want to buy or sell. These can include bonds, currency, futures, and stocks.
You can deposit and withdraw money at any time without worrying about penalties. Some firms also offer perks.
3. Custodial Accounts
You can use a custodial account if you’re interested in standard tax breaks (for individuals under 18). There are no restrictions for how the funds are used, either.
However, you’ll also need to remain vigilant with this option. Since there are no restrictions, you might feel obligated to spend the money elsewhere. For example, you might decide to purchase a car or fund a vacation instead.
Before making these mistakes, consider learning how to continue building wealth from a team of experts first.
4. Roth IRAs
Instead of a 529 plan, consider Roth IRAs instead. You can start saving for college while investing for a larger return. This type of account is usually intended for retirement.
Roth IRAs are individual retirement accounts. You can save and invest your after-tax money.
You can withdraw these funds early without a penalty if it’s to pay for college (or another qualifying reason).
No 529 Plan Needed: 4 Alternative Ways to Save for College
Saving for college without a 529 plan is easier than you might think. Consider using one of these alternatives for educational expenses. Otherwise, consult a professional.
Gathering expert advice can help you make more informed decisions about your finances.
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