Education is one of the greatest gifts you can give your child, but the expense of tuition and other learnings can make it feel like saving enough money to provide the education you want your child to have is an impossible task.

The higher tuition fees for college have been a gradual increase for many years with studies confirming these trends while most parents worry about how they would cover their children in the future. Fortunately, there are cutting-edge ways to save for that future education that make it easier and even fun.

In this article, we will dive into 25 different, creative, and practical ways to save for your child’s education from traditional saving accounts to new-age investments. These tips will not just help you save up the money you need but will also ensure that your child has the best opportunities available when the time for higher education comes around.

1. Open a 529 College Savings Plan

A 529 is a tax-advantaged savings plan for educational expenses. The money compounds on a tax-free basis, and withdrawals used for qualified education expenses are tax-free, too. This can make it an appealing choice for those wanting to save for their child’s education.

Why it’s effective:

• Tax advantages.
• The ability to use them flexibly (includes tuition, fees, books and even room and board).
• Able to be used at most accredited institutions, including trade schools.

2. Consider a Custodial Account (UGMA/UTMA)

UGMA and UTMA accounts are custodial accounts that enable parents to save money for their kids. These accounts are adaptive and do not need to be for education, although they can be for educational purposes.

Benefits:

• Another benefit is the funds can be used anywhere not limited to education
• Not as high contribution limits as a 529 plan
• Can be a gateway for teaching your child investing

3. Set Up a High-Yield Savings Account

A high-yield savings account pays better interest than a traditional savings account, so it’s a good option for stashing away cash for your child’s education. Not as powerful as investments in stocks or bonds, it provides a safer, low-risk way to help your savings grow.

Advantages:

• Low risk
• Readily available funds when required
• Higher than regular savings accounts interest rates

4. Invest in a Custodial Roth IRA

A Roth IRA is often used for retirement savings, but you can also use one for your child’s education. Because contributions are made with after-tax dollars, withdrawals qualified under a Roth IRA are also tax free. The good news is that if Roth IRAs are intended for retirement, they can be withdrawn, penalty-free, for approved education expenses.

Pros:

• Tax-free growth.
• No required minimum distributions (RMDs).
• Flexibility in usage.

5. Start a Regular Investment Portfolio

Investing in stocks, bonds, mutual funds or exchange-traded funds (ETFs) can offer a higher return over time than savings accounts or CDs. And with regular contributions, a well-diversified investment portfolio could grow sufficiently to fund unimaginable education expenses.

Key tips:

• Spread investments out across various asset categories (stocks, bonds, etc.).
• Invest in low-cost index funds.
• Keep an eye on the portfolio and adjust it based on what is happening in the market.

6. Open a Custodial Brokerage Account

You could also open a custodial brokerage account, where you invest in stocks or other securities on behalf of your child. Similar to UGMA/UTMA accounts, but have a wider array of investment options, including mutual funds and bonds.

Benefits:

• Ability to select investment strategies
• Money is transferred to your child once they turn of majority
• This can be used other than educational.

7. Utilize Tax-Deferred Accounts (Traditional IRAs)

A traditional IRA is another potential investment purpose, which can be created with pre-tax income. The primary use here is for retirement, but if you are in a lower tax bracket today you may choose to utilize an IRA to get the full tax advantage of it and use that money when you need it for your child’s education.

Key points:

• Take tax deductions in the year you contribute.
• Funds grow tax-deferred.
• Penalty-free withdrawals for qualified education expenses.

8. Create a Budget for Saving for Education

Have a specific education saving budget Pickup a certain amount of money per month to go into your education fund, and make sure that amount is in your budget.

Budgeting tips:

• Allocate a certain proportion of your monthly salary for education
• Look to eliminate frills and cutting back on unnecessary payments to save more
• Are there apps or tools to track savings progress

9. Take Advantage of Employer Education Assistance Programs

Some employers have education assistance programs that may pay for all or part of your or your child’s tuition. If your company has those benefits, take advantage of them to reduce the cost of your education.

Benefits:

• In some programs tuition cost reimbursement is available.
• This includes opportunities for further education or certifications while in a job
• Applicable for undergraduate and graduate programs

10. Use Cashback and Rewards Programs

Cashback rewards are widely available from many credit cards, banks and online retailers. You can allocate a portion of your cashback rewards to an education savings account to slowly accrue funds little by little.

How to maximize rewards:

• Spend on everyday costs with cashback credit cards
• Create a savings account just for rewards
• Maximize your returns by shopping through cashback portals

11. Teach Your Child About Saving Early

Teaching your child the value of saving at an early age not only sets them up to be financially responsible, but sets them up to save for his or her own future education as well. When they’re older, encourage them to add to their own savings account or 529 plan.

Educational tips:

• Set up a separate savings account for your child
• Set savings goals together
• Motivate saving with match contributions

12. Look for Scholarships and Grants Early

One of the best methods to save money on your child’s education is to obtain scholarships and grants. Many scholarships are available to students as young as high school age, so there’s no such thing as too early to start researching and applying for financial help.

Steps to take:

• Identify local, state, and national scholarships
• Encourage your child to join after school activities
• Assist them with standardized testing that could qualify them for scholarships

13. Open a College Savings Bond

Series EE U.S. savings bonds are a third investing option for saving for your child’s education. These bonds accrue interest and are not taxed at the federal level when they are redeemed for qualified educational expenses.

Why it’s useful:

• Safe and secure.
• Has a tax-exempt status when kept for education.
• Low minimum investment.

14. Start a Savings Plan with Family and Friends

A unique way to save money for your child’s education is via family and friends. Create a savings fund for them that family and friends can add to, particularly for birthdays, holidays, or other special occasions.”

Tips for success:

• Set up a visual savings fund where deposits are tracked.
• Establish clear and definable goals; communicate these to family members.
• Celebrate milestones together.

15. Utilize State-Sponsored Prepaid Tuition Plans

You can lock in today’s cost of a future college education with prepaid tuition plans offered by some states. These plans could help ensure that your child’s education is paid for, no matter what tuition looks like a few decades down the line.

Key details:

• Available in some states.
• Pay in Freeze Tuition at Current Rates.
• Works at state universities and occasionally out-of-state institutions.

16. Invest in Real Estate

Real estate a great way to build wealth over time. As described in my free guide, investing in rental properties, or properties that appreciate in value well can provide a future nest egg for your child.

Benefits of real estate:

• Real estate always gains value in the long term
• Can generate passive income with rental properties
• Real estate may help hedge against inflation

17. Crowdfunding for Education

Learning by the book Families use GoFundMe and other crowdfunding platforms to raise money for educational expenses. You could set up a campaign on a site explaining your need for funding and distribute it to your network.

How to use crowdfunding:

• Craft a strong and emotional campaign
• Promote your campaign in Social Media and to Friends and Family
• Provide little incentives to help, such as thank-you notes

18. Start a Peer-to-Peer Lending Fund

16; Peer to peer lending Investing in peer to peer lending platforms like LendingClub means loaning your money to people who need it, and making a profit from your investment in return. You can redirect these returns toward your child’s education savings.

How it works:

• You provide loan to borrowers on P2P lending sites
• The loan will repay to you, and you will earn interest on the loan as they repay.
• Funds usable for educational expenses

19. Use Tax-Free Gift Contributions

If you have some generous family members or friends, they can also make tax-free contributions toward your child’s education fund as well. The IRS permits individuals to gift up to $15,000 per year per recipient without incurring gift tax.

Benefits:

• Tax-exempt contributions from family and friends.
• An excellent way to build savings outside of just your income.

20. Plan for Education Expenses in Your Will

If you are already considering long-term needs for your child’s future schooling, include that in your will. You can stipulate that a portion of your estate will go straight to your kids’ education, assisting them where it counts the most.

How to include in your will:

• Allocate a portion of your estate for education.
• Make explicit instructions on how to spend the funds.
• Talk to a financial adviser about what you hope to accomplish so that your will is in step with your plans.

21. Use a Family Trust to Save for Education

Saving for your child’s future education is a great use of a family trust. A trust lets you designate how and when the money should be used for your child’s benefit, including for education, giving you more control than a savings account would.

Key benefits:

• Ability to dictate how the money is distributed.
• Shield assets from taxes and creditors.
• Possible reduction in estate tax liability.

22. Encourage Your Child to Participate in Fundraising Activities

Ex: Many schools and communities through raising. Whether it is a bake sale or a charity run or both, these events can provide an opportunity for your child to engage meaningfully in contributions toward the future.

How to participate:

• Involve your child with fundraising events.
• Then you can get involved with local charity organizations.
• Establish fundraising goals and help each other stay on track.

23. Use Peer-to-Peer Savings Apps

Apps such as Qapital or Chime can help you set and track savings goals, which includes saving for your child’s future education. These apps take your purchases and automatically round them up, putting the remainder into a savings account.

Benefits:

• Easy and automated savings.
• Use goal-setting features to not lose motivation.
• Low fees and user-friendly interfaces.

24. Maximize Tax Deductions for Education

Student loan interest and tuition are examples of expenses that may be deductible as education-related expenses. This means that by maximizing your tax deductions, you can put away even more money towards your child’s future education.

Key deductions:

• American Opportunity Tax Credit (AOTC).
• Lifetime Learning Credit (LLC).
• Student Loan Interest Deduction.

25. Teach Financial Literacy Early

Let’s go through some of the best ways to prepare your child for financial independence: One of the best ways to start preparing your child is teaching them the basics of financial literacy. When your child learns how money works then they can make better financial decisions when it comes time to pay for their own education.

Tips for teaching:

• Set up a savings account in your child’s name
• Use real-life situations to teach budgeting and saving
• Play apps and games that teach about finances

Conclusion

Saving for your child’s education can also be done without stress or overwhelm. If you play your cards right, in the long run, you could build up a substantial fund to ensure your child will have access to education, no matter what exorbitant tuition fees they feel like charging in the future.

Using a combination of traditional savings vehicles and a creative approached will help you will be one step ahead of the financial game while providing hereditary safety for your little one. Get started today, and you will be much closer to making their educational dreams a reality tomorrow!