Parents often ask me when they should start saving for their child’s college education. My flip answer is usually, “As soon as you know you’re expecting!” After we laugh a little, I explain that the answer really depends on each family’s individual financial situation.
The ultimate goal would be to save for your child’s entire lifetime. If you can put aside as little as $50 every month, even without interest, that adds up to more than $10,000 over 18 years. Double that to $100 a month and you’re over $20,000. The reality for most families, though, is that it is very difficult to save any amount of money on a regular basis. There are mortgage, car and health insurance payments to make, along with day-to-day expenses like food and clothing. Emergencies and medical expenses often drain any existing savings accounts.
Time flies by, and you’re suddenly facing the fact that you don’t have any money for your child’s education. What is a family to do? Here are some tips that might help:
• It’s never too early to start saving: If you’re young enough, definitely try to start saving money as soon as you can. If you can’t commit to saving a certain amount every month, then put aside money you may receive when your baby is born, for yearly birthdays, graduations or special events. Every little bit really helps, and it can add up over the years. Make sure you do look into savings options so that your account will grow with interest added.
• It’s never too late to save, either: You may think you’ve waited too long to save, so you just give up on the idea. But that doesn’t help the situation. Even if you don’t save anything until your child is in high school, it can help pay for books, fees and other expenses. Most students qualify for some type of financial aid, but these cost of living expenses can really eat into a family budget.
• Get your family involved: Most grandparents, aunts and uncles, and other relatives are very generous over the years. Instead of the big, impressive gifts they might want to buy, talk to your family about buying smaller gifts and putting aside part of the money in a savings account.
• Dedicate part of “windfall” events to college: Some families might be tempted to spend any “windfalls,” such as an inheritance, bonus, or unexpectedly large tax return, on a vacation or luxury item. Make a promise to yourself that you will put at least a portion of any surprise income into the college fund.
Saving can be hard, and it may feel like you are depriving your family, but the alternative is to use student loans to pay for college. That course could put even more financial pressure on you and your student for a much longer time in the future.