There are many ways to save for college, but the most important thing for you to remember is to start early and to keep contributing. Interest adds up over time, so put your money to work for you now with a college savings plan.
College Savings Plans
Putting money in a bank account means you will accrue interest (a small percentage of your savings will be added to your money at regular intervals). It also helps you remember that the money is for college, not for spending on movies, eating out or car repairs. Some savings plans, like the Indiana CollegeChoice 529 Savings Plan, have additional benefits.
- Indiana CollegeChoice 529 Savings Plans
You can designate a regular savings account at a bank for college costs, or you can invest in a tax-free Indiana CollegeChoice 529 Savings Plan account. It only takes $25 to get started, and your account grows free of taxes. Withdrawals for education expenses are also tax-free.
Contributions to your Indiana CollegeChoice 529 Savings Plan earn a state tax credit (up to $1,000 annually). Anyone can contribute to an account and take advantage of the tax credit. The money you save can be used for your education or that of a family member—even if you move to or attend college in a different state.
- Save more with Upromise
You can also link your credit card to Upromise and have a percentage of what you spend on everyday purchases like groceries go directly into your college savings plan. Learn more at Upromise.com.
The best way to save for college is getting in the habit of saving a little bit at a time on a regular basis. To get started, you need to create a budget. A budget tells how much you can afford to set aside after all your household expenses have been paid.
- Add up your total household income.
- Add up your fixed expenses: essential costs like food, utility bills and car expenses like gas and insurance.
- Subtract the total fixed expenses from your total income.
- Take out an amount for college and retirement savings (as much as you think you can afford).
- The money that remains can be spent on flexible expenses, such as entertainment and eating out, or put in your “rainy day” fund for those unexpected expenses that always come up.
Many money management software tools can help you save for college, too, but all you really need is a pencil, some paper and a commitment to keep saving.
Be creative about saving for college! Designate a percentage of your earnings from a part-time job for college, or decide that part of all gift money will go in a college savings account.
You can also search for scholarships to help decrease your college costs. Use the Indiana College Costs Estimator to see the net price (what you pay yourself) of attending an Indiana college once your expected financial aid has been factored in.