With money of course!
But seriously now, one of the most important things that you will save money for will be college. I”m not sure I know anyone that would say that their kid is not going to go to college. Everyone wants to go to college! For a child born in 2007, college will cost anywhere from $150K to 200K depending on where they go. That”s right, $150,000 bucks for a good state school or state university. If you have your sights set on Princeton or Stanford, well, good luck!
There a few things that can help you save for your little one. The first is the 529 plan that has been around for a while but only recently has gotten really good. This plan allows you to set aside money that will grow yearly until it is spent for school. An advantage of this plan compared to mutual funds or other vehicles is that the money grows tax free! That means the government will just give you all the interest! Also, in these plans, the beneficiary is not the account holder. This means the account holder can change it at any time and it can be used at many different schools, not just a university.
You can also use traditional means of investment, be it stocks, bonds or mutual funds. Some of these are much more risky, yet can yield higher returns. You should contact a financial planner or accountant to really get more information about them. Some are tax free, some are not, it really depends on the method. Using the magical tool known as compound interest, you can really rack up some gains over the years by just putting in a few hundred dollars per year. And when your child is young, asking for money for their college fund at holidays and birthdays will really speed things along.
Also keep in mind that there are many loans, grants, fellowships and all kinds of other tools to use for funding college. Some require you to pay them back on very generous terms while others are just outright payments of cash for tuition, books and room expenses. In addition to federal and state money, there are also local scholarships and awards. Don”t forget to look around and apply for as many as possible. A $100 scholarship will buy at least half a book and maybe even more!
Even if you still fall a little short, your children can even work during college to help with the cost. This not only earns them some cash but allows them to get work experience. You could even make a deal where you pay for the college expenses, but anything extra, like the coffee bill, they will have to pick up by working.