Procrastination can get to the best of us when it comes to tucking away money for university.
Maybe you keep telling yourself there will be more time to save for college in the future or you’ll get around to it when you’re in a better situation financially.
It’s hard balancing your financial obligations with something that can seem so far away. But unfortunately (ask any parent!), eighteen years can fly by and your kid might go off to college without a dime saved.
Offering your child financial freedom is a huge gift that will set them up for future success. Here’s why you need to save for college as soon as possible:
Your Savings Grow Over Time
Here’s a secret you might not know: your investment grows over time.
Let’s say you save $100 per month with an interest rate of 7%. In 18 years, your child’s college fund will have $41,136.83.
In other words, if you start saving when your child is 7-years-old, you could miss out on doubling or even quadrupling your investment compared to opening an account when your child is born.
You Can’t Rely Solely on Financial Aid
It’s so important to realize financial aid isn’t going to take care of all of the costs associated with going to college.
Most financial aid packages come with hefty student loans that you or your child will be expected to pay back. There are only 75 colleges in the United States (out of 5,300) that cover 100% of students’ financial needs (and even eleven of these only cover freshmen).
If you don’t want your kid to end up with mountains of student debt, it’s best to start saving ASAP.
Be Prepared If You Experience Any Setbacks
Life has many ups and downs. People lose jobs, start new careers, or make poor investment choices.
If you find yourself in one of these situations, you might not be able to continue contributing to your child’s college fund until you’re in a better place financially. Sure, this may seem disappointing, but if you started saving early on with a 529 savings plan, your money will continue to grow tax-free until your kid is ready to use it for college. This will make it much easier for you to pick up where you left off when your finances are in order.
Friends And Family Can Offer a Helping Hand
Planning for a college education from the time your child is born is a great way to maximize all of the gifts your child will get over a lifetime.
There are plenty of savings plans (including Sootchy) that let your friends and family donate to your child’s college fund almost instantly. If your best friend is confused about what to gift your baby, just let him know he can make a secure, electronic deposit to their college fund. It’s way easier than dealing with checks or envelopes filled with cash that can easily get lost.
Your friends and family will love having the opportunity to invest in your child’s future.
I hope this article helped you decide now is the time to save for college. Let us know if you have any questions about paying for your child's college tuition.