One of the questions that many anxious parents ask themselves is this: When should I start saving for my child’s college education?
The answer, as it is for so many questions related to saving, is, “as soon as possible.” It’s never too early to begin saving for your child’s college education. Indeed, the sooner you start, the more time you will have for compound interest to work on your child’s behalf.
Start as Early as Possible
Some people scoff at the idea of starting a college savings account when a child is still an infant. After all, isn’t it a little ridiculous for an infant to have a 529 plan ? It’s not silly, though. College costs continue to rise, and there is very little that can be done to stop them. At the same time, scholarships and other forms of financial aid are becoming scarcer. That means that, like retirement costs, college costs are going to be increasingly on the family to cover.
Start saving as early as you can. Even if you can only put a few dollars in each month, that’s better than nothing. Many college savings plans can be set up to automatically take as little as $25 out of your checking account each month. While that $25 a month may not grow into enough to pay for an entire four-year degree , it can still provide a significant amount of the funds your child needs to pay for school. Besides, as you earn more money later, you can increase your contributions to the savings. The important thing is to get started.
Get Your Child Involved
You should also encourage your child to become involved with college savings. As soon as your child begins receiving an allowance , he or she should be learning to save for long-term goals like college. Help you child set aside some of his money for the future. It may seem silly to have your child set aside $1 out of his or her $5 allowance each week for college, but the important thing is the habit. Your child is learning the importance of saving for a far-off goal, and developing a valuable skill.
When your child gets older, and begins his or her first after school job , it is important to encourage him or her to continue setting money aside. Add it to the 529 plan, and it will add to your contributions and speed up the ability of the account to earn money. Your child needs to feel involved in the process; if it is something that comes “free” to him or her, a college education may not be as valued.
In the end, though, you might not be able to save up enough to completely pay for college. However, the earlier you start, the better position your child will be in financially when he or she finishes school. Even if the college savings are supplemented by loans and scholarships, they can still play a big part in college funding. And the earlier you start, the bigger that part will be.
(Photo: ajagendorf25 )