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- Solution for Child Higher Education
The years between a baby’s first steps and becoming a college freshman can pass so quickly. Even though it’s true that the earlier you begin saving toward college the better, it’s never too late to start. This checklist will help you make the most of the time you have to save for college expenses.
Assess your needs and set a goal
First, start by answering some basic questions:
- How many children do you have or plan to have?
- How many years before they start college?
- What are your preferences for schools: Public or private? In- or out-of-state? Is there a specific school you have in mind?
- Will your child attend college for more than four years? What about grad school?
Next, do some research on the projected costs for college based on your goals (Our College Planning Expert can help you estimate the monthly savings you’ll need for different scenarios). Then you’re ready to establish a realistic savings goal so that you can decide on the percentage of the costs you want to pay and track your progress.
Solution for Child Higher Education
Consider college savings and investment plans
Now you have a specific goal you're working toward. How do you get there? There are a number of investment and savings options available to help you pay for college, some of which may offer tax advantages.
Save and invest early and often
Start saving and investing as early as you can for your child's education to give yourself a longer time to meet your education funding goal.
Starting early can also help you benefit from the power of compounding, which essentially means that you earn interest on your interest. And if you're using tax-advantaged plans or accounts, you can also benefit from the opportunity for tax-deferred growth, which may make a significant difference in your savings.
Make saving for college part of your routine household budget, just like saving for retirement or paying your utility bills. Saving automatically through payroll deductions or automatic transfers can make it easier to set aside money on a regular basis.
Look for more ways to save
Take a close look at your expenses - you may be surprised to find funds that you can redeploy to your college savings goal. Has your child reached kindergarten age? You can use those daycare or preschool fees for college.
Can you cut costs by making different choices? That daily rs.10 latte really adds up, for example. Consider ways to cut your family's spending, like bringing lunch to work or school and eating out less. Instead of staying at a hotel during vacations, a vacation rental may save some money. There are many ways to trim expenses without making major lifestyle changes. When you come into more money — a bonus, inheritance or tax refund, for example — direct that towards your college savings fund instead of spending it. When you get a raise at work, increase your monthly college savings amount.
Ask friends and family to get involved
Grandparents, relatives and friends can be a source of funds for college: Ask them to contribute to your college savings plan on holidays, birthdays and special occasions instead of giving a traditional gift. You can even get your children involved in saving, by contributing a portion of their allowance or job earnings toward your goal. Every dollar you put aside now is one less that he or she has to find later.
Once college is a few years away, it's time to look into grants, scholarships, loans and other types of financial aid and assistance. When it comes to borrowing for school, keep these guidelines in mind:
Borrow only if you must and as little as you can
Exhaust all govt. loan options before you resort to private loans, which often carry much higher rates
Investigate repayment options thoroughly before signing any papers
Work with a financial professional if the amount you're borrowing is substantial (including future loans)