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Going into college can be quite an expensive but worthwhile investment. Parents are concern about the rising prices of tuition and other miscellaneous fees that might be involve. With the increasing tuition rates every year, parents may need more than a few thousand dollars in the bank to help send their child to get a four year degree. For those parents who have invested on a good educational plan letting their child go to college will be  a breeze but what will happen for those that have none of this?

You can also inquire on a 529 plan is based on Section 529 of the Internal Revenue Code which is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. 529 plans fall into two types:

• Savings plan which works similarly to a 401K by investing your contributions in mutual funds or similar investments, your account will either increase or decrease depending on the performance of the investment that you have chosen.
• Prepaid plans which allows you to pay in advance the cost of sending your child in either a private or out of state college. When you entered into a prepaid plan offered by the state you will freeze the tuition fees and offset inflation rates. The prepaid plan does not cover the cost of room and board and may change their terms depending on the state where it was applied. A wise move would be to know what will apply in the state where you plan to send your child for college

Do you know that you can apply for rebates from enrolling in a loyalty program which are not subject to income tax or sales tax? This works like frequent flier miles when you shop or dine at Staples or McDonald’s.

For students who may just be entering their college life here are some practical tips on helping your parents and yourself save for college:

• Apply for scholarship if you know that you can qualify.
• Saved on books by using used books which can be wrapped with a new plastic wrapper. Using the library would also help you saved on books. You can also use borrowed books or sell the ones that you have during your previous years of study.
• Keep your dressing simple. You don’t have to follow the trends after all in college most people do not care what you wear since they are busy with their studies or extra curricular activities. Scouting for bargains can be both fun and can help you save a lot on money.
• Avoid using credit cards when it is not necessary for those who have unpaid balances learn to pay this and pay on time the next time to avoid higher interest rates.
• You can still enjoy participating on fun activities without breaking the bank so to speak
• Prepare your own food to avoid unnecessary expenses
• Apply for part time job if your time allows you

People do often make it their new year’s resolution to try to find ways of saving their precious money.  It is so easy to make a plan but the reality of implementing that plan is not so simple. Do not get me wrong since saving money is not an impossible task it just requires a solid plan through careful planning.  With a little bit of practice and advice you should be able to start saving money.

Steps on How to Start Saving Money

• Start by setting realistic personal goals. It is easy to maintain and stick to your budget if you have a specific financial goal in mind. Start simply by having short term goals such as completing your house payments or have a long term goal such as save for your retirement.  Establish a time frame for your specific goal like for example you want to own your own house after 3 years.
• Time Frame: Make a list of how much you are willing to save each week, each month and each year for that goal depending on your present financial situation.
• Income: You must write down the amount of money that you earn in a month which includes your monthly salary (after taxes) and other sources of income such as additional jobs.
• Expenses: Now that you know how much you earn calculate the amount of money that you spend in the same period of time. Keep a record that specifies how much each expenses and what goes to where.
• Calculate the excess: Subtract your monthly expenses from monthly income. The left over can be set aside for savings. If you find out that your expenses are bigger than your total income it is time to reduce your expenses.
• Keep Records: Keep a record of your expenses, income and savings in a ledger for easier updating.
• Create Savings Strategies. If your surplus income is not sufficient you can find ways of saving money to reach your goal.
• Keep a monthly expenses record. Go through the expenses and look for ways of cutting them down. Little things do add up. For example you save on your daily coffee allowance which can cost you $4 per day/$20 a week/$80 a month or over $1,000 a year. You can decide to make your own coffee at home instead. The same goes to for expenses related to food and so on and so forth.

As a youngster I was given this piggy bank by my parents in order to learn the value of saving. But as one gets older stashing your money under your bed is not enough especially during these financially challenging times.
Saving money means that a person has more at the end of the year. Saved money assures us that you have a financial safety net in case there are life events such as losing your job or becoming disabled. This protects you from suffering economically during this life changing events.

Saving earns interest. The interest that you earn from your savings will depend on the current financial trend in the market. You have more financial savings option just make it a lifestyle habit.

Planning for the future means saving in IRA’s, 401(k) plans or other retirement plans that will help you provide enough income for a safe future. Invest in mutual funds, shares, bonds and other investment options. Investing money can help you reach a higher return but do not take risk more than what you can afford.

Get out of debt. There are many expenses that you cannot avoid like your basic necessities such as food, clothing and many more. But there are expenses that you cannot pay all at once. Sometimes you apply for a loan. Plan to pay this loan one by one and live frugally so that you will be out of debt in no time.
Saving money can improve the quality of your life to make you more emotionally stable too. You can sleep better knowing that you can achieve your dreams.

There are some types of traditional bank savings accounts:
Money Market Account: Best for building up long term savings goals that you need to access right away. This can be use as emergency fund or house down payment. Some banks put restrictions on the amount of checks that you write from the account. There is a minimum balance required.

Certificate of Deposit: It is a debt instrument issued by the bank that pays interest. In simple terms you are lending the bank your money for a predetermined time period that will earn a set interest rate at the time of its maturity. It is FDIC insured and yields higher interest rates than regular savings account.

Individual Retirement Account, or more widely known as simply IRA, is an account that is created to keep money for future use, e.g. retirement, or to avail tax reduction.  It has to different types – the traditional IRA as well as the Roth IRA.  Not all qualifies for the latter, but the setup required is relatively easy.  Management and dealing with issues are the harder parts of the game.

Just to give a background on a Roth IRA, it is that kind of IRA wherein the contributions made are not tax deductible, meaning once you get you reach 59 ½ years of age and start receiving your income, it will not be taxed by the government as an income tax.  This is set up according the Taxpayer Relief Act of 1997.  Limits on the contribution will depend greatly on your marital status, whether you are married or single, or you are making a joint contribution together with your spouse.  This limit is also decided based upon the Modified Adjusted Gross Income, or the MAGI, and the amount is noted as per the IRS Publication 590 of 2008.  You can file and contribute for a Roth IRA whatever your age range is, as long as you earn an income within the limits of the MAGI.

Distributions or withdrawals done are automatically exempted from any tax if it reaches the conditions given as per the law.  First of which is that distributions should be made upon reaching age of 59 ½ or beyond.  Another scenario is when you are ought to buy your first home, you can withdraw a maximum amount of $10,000.  Disabled persons who previously applied for Roth free of disability are also eligible for the tax exemption immediately after proving disability.  In the case when the client dies before any of the above conditions are met, the money is automatically entitled to the client’s beneficiary.  There are some cases when a client might meet all of the conditions but cannot get to withdraw his/her contribution.  This usually happens if the investor has stashed his money in the account within less than five tax years on the time of meeting the above conditions.  These cases can require that investor to have another Roth IRA, and will begin another five tax years with this account, with a tax year being different from a calendar year.

If the investor is already covered under a 401(k) account, he/she can contribute to the Roth, but he/she cannot roll over his/her account to become a Roth IRA.  This is only possible when that person changes employment type, since he/she has the right to take away the money invested in the 401(k) plan to invest in anywhere he would want to.  The options for investment will include the IRA of course, and from this point, it is actually better to roll over to the traditional IRA rather than with the Roth, as in the traditional IRA, one will be forced to withdraw his amount upon reaching 70 1/2, while in the latter, withdrawals and distributions are not mandatory.
The main goal of the Roth IRA is being able to give benefits to retirees once they reach the retirement age and can no longer work.  In this way, one can save up in advance to be able to spend freely once upon reaching the required age and not worry about having to pay income taxes when this time comes.