Commentary by Joyce Foster
If you’re a young parent, one of the greatest challenges you will likely face in building a brighter future for your children is to find a way to help them afford higher education.
The best strategy to build a college fund is to start it as early as possible with a regular savings program.
However, if your child is a teenager and you’re just beginning to save, here are a few suggestions:
- Save what you can reasonably afford to put away for your child’s college fund, but don’t sacrifice entirely your retirement savings in the process. Your child can borrow for education, but there are no grants or loans to help afford your retirement.
- Whenever you begin saving, consider using a tax-advantaged approach, such as a 529 college savings plan that allows earnings to grow tax deferred and the tax-free withdrawal of funds for qualified education expenses.
- Have a realistic discussion with your children about what to expect in their selection of a college. If money is limited, they may have to scale back their choices to more affordable schools or geographical areas.
Joyce Foster, CFP®, MBA is a Financial Advisor with Foster, Pike & Associates, a financial advisory practice of Ameriprise Financial Services Inc. in Indianapolis. She specializes in fee-based financial planning and asset management strategies and has been in practice for 32 years.