If you have children, no matter what their age, it’s time to start saving for a college fund. In fact, the sooner you start the better off you’ll be. Sure, saving money isn’t easy, but when the time comes for your three-year-old to go off to college you’ll be glad you had the foresight to save the money. You’ll be even happier if you encourage the child to save for their own college education along the way. Following are a few tips on ways to save for college.
Save Early, Save Often
It’s never too early to start putting money away for a college education. In this day and age of technological wonders the day of walking in off the streets with only a high school education and getting a job with fantastic wages and even more incredible benefits is no longer feasible. Those jobs no longer exist. Even entry level jobs are reserved for those with a higher education. That means you need to begin saving for your child’s education while they’re young, because the cost of that education continues to rise. So while you’re putting money away for your own retirement, you also need to be putting some into a college fund. If you can, find a way to set aside $25 a week from the time your child is a toddler, and don’t touch it for any reason, by the time they’re ready for college the accumulated total should be enough to get a good start on paying for their education–providing tuition rates don’t increase at a faster rate than they are now. The child should also be encouraged to start a savings account earmarked for their college education.
In addition to a savings account, it would be a good idea to put some of your resources into investments that will be directed toward a college fund. Investing in stocks or mutual funds could add not only to your own retirement fund, but to your child’s college fund as well. There are many methods of investing that are low risk but will accrue enough interest to make the investments worthwhile. The less money you or your child has to borrow for their high education the less will have to be paid back–not to mention the interest you’ll be saving. Investing in a savings plan, such as a 529 Plan, which is an educational savings plan offered by individual states or institutions of high education that have definitive tax advantages, is one way to go. Consulting with an accountant or tax attorney could help you come up with ways to invest and save money that are tax exempt.
If you can make sure your child studies hard and applies themselves they will hopefully make decent grades in school. This could lead to them receiving scholarships to help fund their college education. From the time they’re able to understand the concept, you should encourage your child to search out possible scholarship opportunities. Those opportunities abound, if you look in the right places. School counselors can help in this process.
There is no better way to save money than to create a budget, and stick with it. When your child is ready for their first year of college it’s time to sit down with them and work out a budget. Knowing ahead of time how much money it’s going to take to get through a year of college will help you determine your budget. Make a list of all the possible expenses for the year. Doing a little research will help you accomplish this. Find out how much the tuition is, plus the cost of books, and don’t forget to factor in clothes, meals, and other incidentals. Once you have a working model of a budget take the time to find any flaws in your calculations. In order to work the budget should probably be broken down into month-by-month or week-by-week expenses which will give you a realistic starting point. The key to working out this type of plan is to stick to it. If you begin to borrow from next week’s budget you may never catch up. You’ll simply fall further and further behind. Create a budget and stick to it.
Kids Can Work, Too
No matter how well you plan a budget there is always going to be something come up that will create an unanticipated expense. You child can help themselves by taking on a part or full time job. Sure, getting a college education is tough, but if you take it upon yourself to help your child understand this basic fact–the less money you owe for student loans when you go out into the workforce, the more money you’ll have to enjoy your life after college–they may be more willing to find a job if for no other reason than to have spending money while in college, or to meet those unexpected expenses.
Guest post from Robin Price. Robin writes about online colleges for OnlineColleges.net.