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Whether college costs are around the corner or a decade away, you may want to start saving now. The big question is how.
Creative ways to save and gift money are always in season, especially when the parent-child bond is involved. One of the odd things about the United States is that a college degree can help you create a quality lifestyle. But in order to obtain that degree students often put themselves in so much debt that it’s hard to overcome. Are there answers? Absolutely. But the challenges are quite real.
Fortunately, the online world is full of suggestions about saving, especially in the context of college funds. We will look into three of them here. These are not for the idle rich. They are for parents who, like most, have to live within a budget and want to pass along memories, as well as opportunities, to the next generation.
Keep the Change
Suppose you’ve gone to the hardware store and bought a tool for $9.90. You hand the cashier a $10 bill. Many of us throw the dime in our wallet or in a tip jar. But what if we saved all that loose change after every purchase?
It may sound old-fashioned. But it’s still fun, especially when the time comes to break open the “piggy” or equivalent. Whether it’s actual change or a dollar here and a dollar there, those numbers can add up in the best way possible.
Putting away loose change – and dollars! – can make a huge difference long-term when saving for college. Photo credit: Shutterstock.com
The idea has been adapted for the digital era. Some banks, such as Bank of America, have a Keep the Change account.
The change is automatically rounded up to the next dollar when you use a card from a participating bank in such a program. So if you pay $9.90 for your gardening tool with your card, $0.10 will go into a savings account without further ado. Odds are that you will be saving between $10 and $20 per month painlessly in this way. In the Bank of America program you can decide to transfer the money on either a monthly or a quarterly basis into a college savings account. Think of those moments as breaking open the piggy: without having to clean up a mess.
UPromise, the company that runs a loyalty program of the same name, was acquired by Prodege, of El Segundo, California, a little more than a year ago.
Just by joining UPromise, a consumer earns cash-back rewards for online purchases. The pandemic taught us all that it is possible to have a lot of things delivered to one’s front door rather than going to a retailer or the grocery store. Keep up that practice, while participating in UPromise, and you will start accruing credits that will be directed to college costs. (Or, if you’ve incurred a lot of debt from your own college education, you can also use UPromise as a way of paying that debt down.)
You might end up spending more than usual, buying items online that you could have bought at the store for less. That is obviously your call, but with some creativity you’ll be able to find situations that work the other way.
Perhaps you’ll find a supplier for pet needs who can leave that 20-pound bag of dog food at your door, at a lower price than a brick-and-mortar store. And you’ll save some money for your child’s benefit. College, here you come!
Download the Early Bird App
Then there is Early Bird Central Inc., the company that offers the mobile app, Early Bird. It allows parents or guardians to set up a Uniform Gift to Minors Act (UGMA) account for their youngsters. This is a managed investment fund, not a 529 plan. It need not be used for “qualified educational expenses.” For some young people, after all, college turns out not to be the best way forward. Once the child teaches 18 yars, typically, the UGMA account can be used for anything at all.
Parents who use this app typically want to set up a fund into which other people — grandparents, uncles and aunts, friends — can make gifts on birthdays and other occasions.
Remember, though, there is a “kiddie tax” for unearned income above $2,200.
EarlyBird’s fund has no minimum investment, and the first $200 is managed free. After that there is a $1 / month advisory fee. There is a processing fee of $2 a gift, charged to the giver. A range of portfolios are available, all using ETFs. Some are quite conservative (100% bond ETFs), some more aggressive to aggressive (100% stock ETFs). All portfolios use ETFs.
It may be worthy of your consideration.