Auburn Savings

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Question: I want to save money for my child/ren to go to college, but we are a growing family. What is the best way to do this?

Answer:  Know that it’s never too late to start saving for your child’s higher education. It’s important to understand that the best time to start saving is when your child is young as this gives the funds the most time to accumulate. But even if years have passed, today is a good time to do your research and open a college savings account that works for your family’s finances.

Here are several options that you may find suit your current needs: 

529 Plan Account

A great savings option is a 529 plan account. These types of plans were designed specifically to help families save for college. NextGen 529 is the State of Maine’s 529 plan to assist Maine families in saving for higher education. Accounts can be funded via payroll deduction, automatic transfers from your checking or savings, or one-time deposits. There are currently grants in place for Maine residents that can really help get the savings started. As of this writing, you can open an account with just $25 and get the $100 Initial matching grant! Talk to your financial advisor or explore the NextGen website at www.nextgenforme.com.  

Custodial Account

If now isn’t the right time for a 529 plan account, a custodial account at a financial institution will assist in getting the ball rolling for savings today. UGMAs and UTMAs are both custodial accounts, held in the name of the child (the minor), but controlled by a parent or another relative until the child reaches the age of maturity. These custodial accounts have been around for years and can provide the formal structure you may be looking for. 

Traditional Savings

Still not sure but know that you want to start saving? Opening a traditional savings account specifically for your child’s future education expenses is an easy first step. Pull together the minimum opening deposit and then map out a plan to fund. One of the easiest ways is through payroll deduction. With payroll deduction the deposits happen automatically when you get paid. Once the funds start to grow, you may choose to invest the funds in a higher yielding option like a certificate of deposit.

Whatever you choose, remember that the most important thing is that you get started with the savings process sooner than later.

Part of the fabric of Lewiston-Auburn since 1887, Auburn Savings provides financial products and services for individuals, families, businesses and the shared community we call home. Visit us at auburnsavings.com