Is It Too Late to Start Saving for College if My Daughter Is 13?
You didn't set up a college savings fund when your daughter was still in diapers, and now that she's hit the teenage years, you may worry that you missed the boat. Sure, you probably can't amass enough to cover the entire college bill, but any money you save now is money you won't have to borrow when she's off to college.
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Just Get Started
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Though you still have four or five years to build her college fund, waiting even a month to get started means that you're losing out on the money you would have deposited, along with the interest that money would have gained long term. State 529 plans offer tax-advantaged college savings, and the money remains tax-free as long as you use it on approved educational expenses. Coverdell Educational Savings Accounts, or ESAs, are another option. Some credit cards even offer cash-back rewards that go directly into the savings account, which is an easy way to bulk up the savings.
Stay Low-Risk
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Since you don't have much time until she'll need the money, you don't want to risk losing the money in high-risk ventures, according to financial company Morningstar. When choosing your investments, look for the ones that are slow and steady, or choose the plan that's meant for 13-year-olds. Some plans start with high- or moderate-risk investments, then automatically switch to safer plans as your child gets closer to high school graduation.
Watch for Fees
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The fees you spend on your account can eat away at any interest you earn on the money. When choosing an account, pay attention to the funds that have low fees and choose the one that best suits your needs. That way, you're maximizing your money.
Do What You Can
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Looking at the current college tuition rates at her dream school now and estimating where they might be in five years can make you panic. Her financial aid will come in a variety of forms, including government grants and loans, grants from the college, scholarships and student loans. You don't need to save the full amount; just do what you can. If you don't have enough to cover all the costs at the college of her choice, perhaps she can qualify for a scholarship or grant, apply for a student loan or defer admissions for a year while working to earn more money.
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