CONTRIBUTED CONTENT — It may seem like the cost of college is out of reach, but with diligent research, budgeting and saving, you can figure out how to pay for the education you’ve always wanted for your child.
State Bank of Southern Utah Senior Vice President Tyler Brown said that having a college savings plan increases the chances your child will attend. The key to successfully saving for higher education is to start early and set money aside regularly.
“Every dollar you save is one less dollar they’ll have to borrow to go to college,” he said. “Show your child you’re making an investment in their future.”
Make saving a habit
Brown recommends setting up automatic transfers so that every time you deposit a paycheck, whatever amount you’ve budgeted for college – whether it’s $10 or $100 – will move into your child’s savings account without any effort on your part. Use technology to make saving a convenient and consistent process.
“Even if you don’t have a lot of money to go around and choose to prioritize saving for education, kids will see that and honor it,” he said. “When kids understand that their parents had to sacrifice to save, they’ll want to do more with it.”
Build a budget
A college savings plan can also be an effective tool to teach kids the basics of budgeting. If they collect an allowance, ask them to decide where their money should go. How much will be put into savings? How much will be used to buy something they want?
“If they have a vested interest in it, they’ll spend that money more wisely,” Brown said, adding that learning to budget early on promotes healthy financial habits for life. As adults, money-wise kids are more likely to become financially independent sooner, worry less about unforeseen expenses, have savings to fall back on after losing a job, be more prepared for change and ultimately retire more comfortably.
Explore financial aid
Even with substantial savings, federal, state and college student aid may still be options to help manage the cost of tuition and other expenses. Aid is typically based on family income and not savings.
Brown recommends consulting a financial advisor at State Bank of Southern Utah and talking to counselors with institutions like Dixie State University or Southern Utah University to learn what aid programs and loan options are available. Students should also apply for as many scholarship opportunities as they can.
Start a 529 plan
Every state offers investment options to save and pay for education. my529 is a nonprofit plan established and sponsored by the state of Utah. Earnings aren’t subject to federal or state tax when used for eligible higher education expenses.
Brown said time is your friend when it comes to a 529 plan; the longer you have money in the account, the more your investment grows. Parents can start a plan before their child is even born, then assign the beneficiary later.
“If you haven’t done it yet, there’s no better time to start than today,” he added.
To this end, State Bank of Southern Utah created the Dollars & Sense online education program that teaches life skills and various aspects of financial literacy. The self-paced learning modules, each lasting no more than 10 minutes, cover subjects such as building financial capability, making prudent investments, owning a home and preparing for retirement.
State Bank of Southern Utah operates more locations than any other financial institution in the area and has flourished by focusing on the needs of its customers for more than 60 years. Brown said the bank was founded with a mission to empower individuals and businesses to take control of their financial destiny, therefore elevating the quality of life for everyone in Southern Utah.
“The more financial education and skills they have, the greater opportunity they have to succeed,” he said. “It’s a win for the customers, a win for the bank and a win for our community.”
For more information about State Bank of Southern Utah, visit their website. The bank is an equal housing lender and member of the FDIC.
Written by ALEXA MORGAN for St. George News.
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