As a new parent, thinking about sending your child off to college may seem like a lifetime away. In fact, you will be getting them ready for campus life in only 18 years. Although this is still a significant amount of year, it only gives you a specific window to start your savings for tuition costs.
As a new parent, thinking about sending your child off to college may seem like a lifetime away. In fact, you will be getting them ready for campus life in only 18 years. Although this is still a significant amount of year, it only gives you a specific window to start your savings for tuition costs.
With college tuition reaching an average of $35,000 per year in 2020, the sooner you start saving, the better prepared you will be when college applications start to go out. Considering that most people start saving for their retirement several decades before they are ready to leave work, saving for college should also be made a priority.
Whether you imagine your child going to Harvard or American International College, it’s never too early to start saving. Let’s take a look at some important benefits of starting your child’s college fund early.
Family Donations
Your child will receive many gifts from grandparents and family members for seasonal holidays and birthdays throughout their lifetime. When you have a formal college savings plan through a dedicated IRA or a 529 plan, your relatives have a unique opportunity to gift your child a part of their future. College savings plans often come with a gifting option that allows others to add to the fund over the year. Your college fund could grow quickly if relatives are encouraged to participate in fund gifts.
Savings Growth
The earlier you start saving for your child’s college education, the more time you have for those savings to grow. College savings like a 529 account allows you to earn money on your compounded interest earnings. This means that you will be able to earn money off your interest and not just your principal investment. The sooner you start putting money away for college, the less monthly investment you will need to contribute over time.
Create Realistic Goals
Without a solid college fund plan in place, you could end up scrounging for resources when your child is older. With a current 4% inflation rate, college’s cost may be higher than you have planned for without a formal savings fund. When starting your college savings early, you can project the amount that you will need over a longer span of years, making your monthly contributions more manageable. Starting a college fund early will also relieve the pressure of debt on your child as they will be less likely to have to take on large amounts of student debt.
Financial Changes
There is no way to tell when your family finances may need to go through an overhaul. Job losses or economic depressions are factors that are impossible to plan for. If your budget suddenly becomes tight, you may be forced to reduce your college contributions. When you start your college fund early, you will have more room to navigate when tough financial times hit.
While you are watching your child scoot around the house in their diaper, the last thing on your mind is college tuition. As a parent, you want to do everything possible to create a healthy and happy life for your child, and that includes a solid future. Talk to your financial advisor today about your plan to save for college tuition.
Starting early will help you to include family members in the plan, give you time to plan, and be prepared for any unexpected financial insecurity. Plan to start your college fund early so that you can help your child move towards their college future with confidence.
With college tuition reaching an average of $35,000 per year in 2020, the sooner you start saving, the better prepared you will be when college applications start to go out. Considering that most people start saving for their retirement several decades before they are ready to leave work, saving for college should also be made a priority.
Whether you imagine your child going to Harvard or American International College, it’s never too early to start saving. Let’s take a look at some important benefits of starting your child’s college fund early.
Family Donations
Your child will receive many gifts from grandparents and family members for seasonal holidays and birthdays throughout their lifetime. When you have a formal college savings plan through a dedicated IRA or a 529 plan, your relatives have a unique opportunity to gift your child a part of their future. College savings plans often come with a gifting option that allows others to add to the fund over the year. Your college fund could grow quickly if relatives are encouraged to participate in fund gifts.
Savings Growth
The earlier you start saving for your child’s college education, the more time you have for those savings to grow. College savings like a 529 account allows you to earn money on your compounded interest earnings. This means that you will be able to earn money off your interest and not just your principal investment. The sooner you start putting money away for college, the less monthly investment you will need to contribute over time.
Create Realistic Goals
Without a solid college fund plan in place, you could end up scrounging for resources when your child is older. With a current 4% inflation rate, college’s cost may be higher than you have planned for without a formal savings fund. When starting your college savings early, you can project the amount that you will need over a longer span of years, making your monthly contributions more manageable. Starting a college fund early will also relieve the pressure of debt on your child as they will be less likely to have to take on large amounts of student debt.
Financial Changes
There is no way to tell when your family finances may need to go through an overhaul. Job losses or economic depressions are factors that are impossible to plan for. If your budget suddenly becomes tight, you may be forced to reduce your college contributions. When you start your college fund early, you will have more room to navigate when tough financial times hit.
While you are watching your child scoot around the house in their diaper, the last thing on your mind is college tuition. As a parent, you want to do everything possible to create a healthy and happy life for your child, and that includes a solid future. Talk to your financial advisor today about your plan to save for college tuition.
Starting early will help you to include family members in the plan, give you time to plan, and be prepared for any unexpected financial insecurity. Plan to start your college fund early so that you can help your child move towards their college future with confidence.
