<span style="font-weight: 400;">Starting an education fund gets harder the longer you leave it, and it will potentially be smaller for your children when they reach college age. However, you can make a significant impact if you begin as early as when they are still in diapers, by contributing as much as you can. So, from opening an education savings account to making the most of time, here are some ideas.</span> <h2><span style="font-weight: 400;">Tax-Free Growth Plans</span></h2> <span style="font-weight: 400;">Tax-free growth plans, such as a 529 (US), are excellent for use in education. The reason is that they allow you to deposit and withdraw funds tax-free for qualified expenses such as education. Of course,</span><a href="https://www.collegeave.com/student-loans/"> <span style="font-weight: 400;">student loans</span></a><span style="font-weight: 400;"> are excellent for paying tuition and meeting some expenses, but they won’t cover everything. However, certain tax-free plans will allow you to add more than usual (such as with an ISA) and take money out when needed, and you have 18 years to contribute.</span> <h2><span style="font-weight: 400;">Education Savings Accounts</span></h2> <span style="font-weight: 400;">There are many different accounts that can help with various things, and education is one of them. You can open an education savings account (ESA) while your child is still a baby, which allows for $2,000 per year before being taxed. So, if you contribute the maximum from birth, your child will have access to $36,000 when they reach 18. You don’t need someone else to tell you that this kind of funding will be a massive advantage when it comes time for college.</span> <h2><span style="font-weight: 400;">Starting an Education Fund with Automation</span></h2> <span style="font-weight: 400;">Perhaps it's a little lower than expected, but 60% of students rely on student loans to pay for tuition. However, most will end up with over $30,000 of debt that they may never pay back after graduating. Of course, </span><a href="https://theincmagazine.com/smart-savings-effective-budgeting-tips-for-young-professionals/"><span style="font-weight: 400;">saving money</span></a><span style="font-weight: 400;"> ASAP will help start a fund for college, but it can be tricky with the cost of living. However, you can treat the college savings as a bill, and set up automated deposits that you just forget about and let grow, offsetting a large part of the costs.</span> <h2><span style="font-weight: 400;">Time is On Your Side (For Once)</span></h2> <span style="font-weight: 400;">The best way to invest is to make contributions on a regular basis, forget about them, and let compounding interest do the rest. With regular contributions from birth, an investment portfolio has 18 years to accrue interest and offset inflation. For once, time is on your side, and combined with other methods, investments can set your kids up for the best possible start to their college life, reducing their reliance on loans and reducing the pressure of a scholarship.</span> <h2><span style="font-weight: 400;">Don’t Neglect Your Own Savings</span></h2> <span style="font-weight: 400;">Of course, you also need money for yourself. While it is admirable to set up a college fund for your children, you also need to think about retirement. While you can</span><a href="https://www.extracare.org.uk/news/how-to-save-money-when-retired/"> <span style="font-weight: 400;">save money in retirement</span></a><span style="font-weight: 400;">, it may not be as enjoyable as you hoped if you always need money. So, before being aggressive with college funding, ensure your own plans are on track. College funds can be financed with student loans and even employment, but your retirement plans cannot.</span> <h2><span style="font-weight: 400;">Summary</span></h2> <span style="font-weight: 400;">Using tax-free growth plans, such as a 529, will help when starting an education fund for your children. However, you can automate savings if you find it hard to add to the fund, but don’t aggressively pursue a college fund if you are struggling to put away money for retirement.</span>
