How to Save For Your Child’s College Fund
While you might be a new parent, it’s never too early to think about college. Columbia insurance agents can most certainly go a long way in securing your financial health, but the same is true of starting to save ASAP for your child’s education. There are a few general tips you can put to good use to better ensure neither you nor your son or daughter are saddled with a crippling financial burden in the form of student debt.
While you’re figuring out your monthly budget with the addition of your newborn, try your best to make room for at least $50 to put towards a college fund. With a seven percent return on investment, that $50 adds up to $20,000 when your child turns 17. If you learn your child decides not to go to college, you can use that money for retirement. Either way, you aren’t wasting time or money.
Look for Additional Ways to Save
Because there’s no telling how much tuition will cost at the school your child chooses, or how much a college education will cost by the time your child graduates from high school, it doesn’t hurt to save more than $50 a month. Because your budget is likely to change over the years as your child grows and your financial situation changes, always be on the lookout for ways to put back more money in your child’s college account. Just because you don’t have extra money to sock away now doesn’t mean you still won’t in the coming years.
Keep Major Account Balances in Your Name
While it’s okay for your teenage daughter or son to have a savings account in her or his name, you’ll want to make sure that account balance stays under $3,000. Any more than that and your child risks losing out on financial aid for having too much money. Should you encounter this scenario, you’ll want to leave accounts with serious numbers in your name. Your child will thank you later, and you’re sure to thank yourself later as well.
Motivate Your Child
Just because you save up money for college is no guarantee your child will be accepted. For that reason, encourage your child to do the best she or he can in school and apply for any and all scholarships available. Working and doing some saving on their own for something like the cost of college textbooks can make things even easier for everyone.
Getting a head start on the cost of college is sure to go a long way in saving you a monumental headache in the future. There’s no telling what’s coming down the road ahead, but there are certainly steps you can take to prepare.
Remember, it’s cheaper to save than to borrow. Because every dollar you borrow will cost you $2 by the time you pay the debt. However, if you save, not only are you eliminating those loans but you’re earning interest rather than paying interest.