Parents are absolutely responsible for savings for child’s future. Since they brought them into the world, they need to ensure that all their needs are taken care of adequately. One of the greatest of those needs is education. Every child needs to get proper education, and it is the parents’ responsibility to see that their child gets the best education that they can afford.
Although school education is free of cost in most regions, college education can be prohibitively expensive. Unless parents plan well ahead and start saving for their children’s higher education, it would be extremely difficult to pay for their college education from their pocket. In fact, most parents would have to start saving for their children’s higher education right from the time their kids are at grade school.
There are a number of savings schemes that are specifically meant for children’s higher education. One of them is the “ 529 college savings plan “. It is a very flexible plan that helps parents to save money for their kids’ future, or even for someone else.
There are also a number of other benefits offered by the 529 college savings plan . The earnings from the plan are exempt from federal tax, as long as the money is used solely for educational expenses. Most states also offer tax exemptions for the plan.
The money in the account is completely under the control of the parents and the child has no control over it. Therefore, it can never be misused at any point of time. If the child does not wish to go for higher education, the amount can be transferred to benefit someone else in the family.
If someone wishes to contribute towards the savings account, they can do so, and there is virtually no restriction on who can contribute money. And the money can also be used at any point of time after the child grows up. There are virtually no age restrictions on when the funds should be used for the child’s education.
There are other financial vehicles too that parents can use to save money for their kids’ future education. But this is one of the most attractive plans that comes with a number of benefits and features.
Of course, parents can also save money on their own without investing it in any financial vehicle. But it is always wise to invest it in a plan that pays dividends and offers tax benefits for the investment.