Receiving child support payments is an important part of life as a parent. Whether you receive large monthly payments or small ones, you should put them away for a rainy day if they are not needed now to pay for bills related to your child. One way to put them away for a rainy day is to save for your child’s education. Here are some tips to make this happen.
One of your first options is to open a simple savings account that earns interest. You won’t earn a lot of interest but you can at least put the money away in an account that you know not to touch, even in your toughest times.
You also have the option of opening an educational savings fund, which is sponsored by individual states. You do not have to open the fund that corresponds to the state in which you live. It can be the state of your choosing. These are known as 529 plans and have very little tax implications.
There’s also the option of creating a traditional trust as part of your estate plan and earmark the money for your child. A trust can be created for every child you have, just make sure that they are earmarked appropriately for the child by their name and for their education so they cannot use it for anything else.
Saving the money you receive from child support for your child’s education is an important decision to make. You likely have a lot of bills to pay for your child in the present, but if you can make it work, make it work and save money for your child’s future.