Why The Best Time To Start Saving For Your Child’s Education Is Right Now

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Why The Best Time To Start Saving For Your Child’s Education Is Right Now

Parents of small children have a lot on their mind. There are always new milestones, from potty training to learning to read, and little ones that require seemingly constant attention. While surviving one day at a time may seem like your only realistic goal, for the time being, there are huge advantages to planning ahead for at least a few things. Your children may be years away from walking across the stage at their high school graduation, but it’s never too early to start planning for college. The best way to get them on the right path for advanced education is by starting a college fund today.

Time Is On Your Side

The biggest reason why you should immediately start investing for your child’s college expenses is that you have so much time until they enroll for school. Compound interest is a magical thing. You can start by making small contributions now, and they will add up to a sizable amount after ten or fifteen years.

All you need to do is choose the best investment vehicle for your particular situation, and make regular contributions to it. For most options, you can have the amount automatically deducted from each paycheck, so you don’t even have to think about it. Don’t despair if you can’t invest enough to cover the entire amount your child’s tuition, housing, and supplies. Every little bit will help them when it’s time to head off to college.

There Is An Option Perfect For Your Family

Your family has many different options when it comes to investing for college. Perhaps you have just considered opening up a savings account for your child, with a very low-interest rate. While this option is a very safe one, other investment vehicles will help you earn much more interest, while providing protection for your investment.

529 Savings Plans, in particular, have many benefits to offer families. These types of investment vehicles are especially enticing because they accrue interest tax-free, but can also be withdrawn for qualifying expenses without being taxed. Do keep in mind that each state handles 529 plans a little differently, so you will want to do some research on the options available where you live. Of course, these are only two of the most popular ways to save for college. You can, and should look in all of your options first.

Tuition And Loan Interest Rates Are Only Getting Worse

The cost of college continues to increase every year steadily. The average college graduate in 2016 owed close to $40,000, and interest rates on federal student loans range between 3.4% and 6.8% (source). The interest rates on private loans are even higher. If these numbers continue to rise as they have over the past few decades, your child could be facing exorbitant expenses when they reach that point in their education. When parents take the initiative to save now, it gives their children the opportunity to pursue their dreams without worrying about paying back student loans for years to come.

It Will Help Motivate Your Children For The Future

Kids may be deterred about whether to attend college if they have no options other than taking out student loans. These financial issues could even influence the career path that they decide to follow if they focus more on cost, repayment, and expected salary.

Children who already have a college fund may work harder in high school, knowing that they are preparing for the next step in their education. Also, taking finances out of the equation will help them focus on their real passions when choosing majors, which will likely lead to being a happier adult.

You Can Give Your Children The “Full” College Experience

Many young adults are enrolling in college, but don’t have any savings to rely on from their parents. One of the big tips they receive for helping to save money on college expenses is to live at home instead of in a dorm room or apartment. The cost of living on campus is significant. However, students are bound to miss out on some of the opportunities to socialize and learn how to be independent if they only commute to a local school.

By saving now, you can help your child benefit from the learning experiences that they can’t get from books or spending time in a classroom. Also, as much as you love that cuddly little toddler, there will come a time when you’re ready for some independence as well.

A college education is integral to your child’s success as an adult. Parents need to do more than just worry about the developmental milestones for each age. They need to look ahead to the financial implications of their child’s education and start building a college fund today.

Jenny is a proud mother of two with a passion for learning how to better save and manage her money. She also enjoys blogging about her experiences with breast pumping and trying to feed her kids on Mom Loves Best and on Pinterest.

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