Financial stability is the best gift you can give your child. With the lending boom in the US, many millennials started taking out large sums of loans for their college education. As a result, now there are parents who are still struggling to pay off their own college loans while trying to pay for their kids’ educations.
The key to getting out of this financial mess is prioritization. It may sound like a cakewalk, but in reality, it may be of the toughest things you will do. There are quite a number of ways you can save up for your kids’ college funds and pay off your own debt at the same time. Here are a few ways you can try –
- 529 plan: this is a great way to save for higher education expenses in the future for your kids. The money saved in this account is non-taxable and can be later used for college fees, buying textbooks and paying for miscellaneous education related expenses. You can save up by recurring transfers for years before your kid decides to claim his/her share.
- An Upromise account: this is both cool and practical. Almost everyone has credit cards nowadays and the Upromise credit card allows you to save money by shopping. Every time you use the Upromise credit card for paying for shopping expenses, a percentage is added to your kids’ 529 account.
- Take help from your kid: saving is a huge responsibility and your child must learn the value of saving from an early age. If you want your kids to live a debt-free life, you need to teach them how to take care of their finances. In this case, you can ask them to contribute small amounts every month towards their 529 accounts and college funds. The money can come from summer jobs, after school jobs or even their own businesses!
- Ask for your family’s help: you can ask your mom and dad and other close family members to contribute to your child’s college fund account and 529 account. This works best if you set is as an alternative for Christmas gifts, birthday gifts and/or new years presents! Although it seems like a really dull option for a child right now, you kid will appreciate you once he/she sees their credit history after 10 or 15 years.
Saving up for your child’s education is never easy. It is even tougher when you have multiple loan payments looming over your family. However, if you fail to repay your student loan before your child is ready for college, you will be forcing your financial burden onto your kids.
We have seen families forced to ask their kids to join Community College simply because the parents were still working towards paying off their own education loans.By setting up priorities you can give your kids the choice of attending a better school and a better college. Always remember that you kids have the full right to refuse a paid-for college education if that means taking complete care of their parents in their old age!