Though the rising cost of college is often considered a parent’s burden, college savings can become a family affair. Here are some creative ideas for involving your child/ren in the college savings process.
Encourage them to work.
Children need to understand that although college is expensive, the potential return on investment can be very high.
By rewarding children with spending money upon completion of their chores, for example, or by nudging teenagers to apply for part-time jobs, your family will collectively gain opportunities to earn more, spend less, and think creatively.
Create a system for saving.
Children tend to respond much better when they know what’s expected. Consider devising a saving system that requires your child/ren to divide their savings in a particular way (e.g. 60% as spending money, 20% for car/college savings, etc.).
Establishing such a system teaches financial responsibility and organizational skills at a young age.
Match their contributions.
Saving enough for college is tough, especially when your only income consists of proceeds from a lemonade stand. Matching your child’s contributions is a great way to give them a boost while instilling the value of money.
If you deposit the matched value into a 529 plan, be sure to review the quarterly statements with your child. Seeing the effects of compound interest and tax-free growth should encourage them to save even more.
Enlist help from Grandma and Grandpa.
According to a 2014 survey from Fidelity, 72 percent of grandparents feel that it’s important to help pay for their grandchildren’s college education. So why not earmark that annual birthday or holiday check from Grandpa for college savings?
Immediately depositing this money into a 529 plan will provide your child/ren with a head start on their college fund, and will foster open conversations regarding the importance of college (as well as its associated costs).