€18.25 – €21.03
Example 1: College Savings Plan for One Child
Number of Children: 1
Language: English
College Savings Plan for Parents with One Child
- Estimate the Cost of College:
- Assuming a public in-state college costs $25,000 per year in today’s dollars, the total cost for a four-year degree would be $100,000. Adjust for inflation (approximately 5% annually).
- Choose a Savings Vehicle:
- 529 Plan: Contribute to a tax-advantaged 529 college savings plan. Earnings grow tax-free, and withdrawals for qualified expenses are not taxed.
- Coverdell ESA: Another option with tax advantages but lower contribution limits.
- Set a Monthly Contribution Goal:
- If the child is 10 years away from college, saving $500 monthly with a 6% annual return would approximate $82,000, which covers most of the cost.
- Automate Contributions:
- Set up automatic monthly deposits into the savings account to ensure consistent progress.
- Maximize Tax Benefits:
- Check for state tax deductions or credits for 529 plan contributions.
- Supplement with Other Resources:
- Encourage the child to explore scholarships, part-time work, or grants to reduce out-of-pocket costs.
Example 2: College Savings Plan for Two Children
Number of Children: 2
Language: English
College Savings Plan for Parents with Two Children
- Assess Combined College Costs:
- Assuming $30,000 per year for each child for a public in-state university, the total cost for two children could be $240,000. Adjust for inflation.
- Open Separate 529 Accounts:
- Open individual 529 savings accounts for each child to track progress separately and maintain flexibility.
- Contribute Regularly:
- Save $800 monthly (e.g., $400 per account) to reach $190,000 in 15 years, assuming a 6% annual return.
- Review Alternative Investments:
- Consider low-risk investments, such as CDs or short-term bond funds, closer to the time of enrollment to preserve capital.
- Encourage Early Planning:
- Begin saving as early as possible to reduce the monthly contribution burden.
