It’s no secret – having a child is expensive, and it only seems more so in our current economy. You want the very best for your kids, and will do anything in order for them to have the best possible future. One of the things you can do to ensure their future is bright, is to start a college fund to make sure they have every advantage when it comes time for them to attend a university. With experts predicting college educations to cost upwards of $95,000 by 2021, it’s only natural to feel a little overwhelmed just thinking about your child’s education.
Take a deep breath. Yes, saving for their college education starts right now, but it doesn’t have to define your financial decisions for the next 18 years. Here are some tips and ideas on what you can do today to make sure you have your finances in order when it’s time for college.
- Put Aside Only What You Can Afford at the Time
Like I mentioned earlier, having a child is expensive BEFORE you even factor in college. When it comes to choosing a savings plan, make sure you pick one that works with you in your current situation. Can you only squirrel away $30 a paycheck? Do it. Every penny counts.
- Teach Your Children the Value of an Education
Raising your children to value higher education will make them want to start saving on their own. Once they are at an age where they can get an after-school job, encourage them to budget their own paychecks and add some money to the college fund pot. This will teach them the importance of allocating finances, responsibility and also makes them feel like they are helping shape their own futures.
- Every Birthday Check Counts
When the kids are younger, put any birthday, Christmas, or Hanukkah checks they might get from relatives into their college fund. Savings bonds are also a nice way to save up.
- Research Loan Options
More than likely, you’re going to have to take out a loan when it finally comes time to send them off to school. Make sure you research all your options to guarantee you’re getting the best deal. You don’t want to end up spending more money than you initially thought because of hidden fees, interest, or other costs.
- Look into a 529 Option
529 plans were designed with your child’s educational future in mind. Most states have 529 options and you can choose from a savings plan or a prepaid plan. This is a good option to look into because 529 plans usually have tax advantages, benefits, and more. They are also exempt from state financial aid calculations.
Remember getting your children through college doesn’t have to stress you out for the next two decades. By making smart decisions now, you can save yourself some financial and emotional headaches once it comes time for them to finally leave the nest.
Angie Picardo is a staff writer for NerdWallet, a personal finance website dedicated to helping parents and students find the best credit cards.