Sending your kids to college is a dream for many parents. Whether you went to college yourself, it can feel as if it’s essential for your kids if you want them to have a good career. Although college isn’t essential, and your child could ultimately decide not to go, making sure your child has the opportunity to go could be one of your priorities. You know that college is expensive, and it’s only getting more expensive. Many students take out loans, but perhaps you want to be in a position to help when they reach college age. If you want the option of college to be on the table in 18 or 10 years’ time, here are some things you could be doing.
Organize Your Debt
If you want to start creating a college fund for your kids, you need to make sure you’re in a good financial position. You might be unlikely to be completely debt-free anytime soon, especially if you have a mortgage or use credit cards, but you can ensure you remain on top of all your debts. Any debts you have to pay should feel completely manageable and hopefully remain so if your financial situation changes. There are different types of loans and lines of credit that you’re likely to handle differently. Credit card debt is likely to be something you pay regularly, and you never want to let get too high. Your mortgage is something you need to have a long-term plan for because it will usually take at least ten years to pay off.
See a Financial Advisor
If you really want to get your finances in order, seeing a professional to help you do it is the way to go. You don’t necessarily have to pay for financial advice, but you can get more tailored advice if you’re willing to pay for it. A financial advisor can take a look at your current finances and help you plan for both now and the future. They’ll be able to get you thinking about your day-to-day finances, how to make some savings, and whether it might be worth making some investments. You need a solid plan for the future and seeing a financial advisor will help you formulate one.
Get Familiar with College Funding Options
It can also be useful to learn about what options people have for funding their time at college. Of course, it could all change by the time your child is old enough to attend college, but it could still help you to familiarize yourself with the general options available at the moment. Things aren’t likely to have changed so much that it all looks completely different. If you went to college, you might already know what options are available. However, if you didn’t, it’s a good idea to investigate things like scholarships and different types of student loan.
Start Saving Early
You can never start saving too early if you want to save a college fund for your child. That goes double for anyone who has more than one child. Your kid might be a newborn, but their high school graduation could sneak up on you faster than you realize. In the grand scheme of things, 18 years isn’t all that long, especially when it comes to saving money. You’ll hopefully be saving for retirement for much longer than that. Go ahead and start saving, whether your child is a new arrival or a little older.
Create a Savings Plan
Knowing when to start saving is one thing, but how to save is another matter entirely. Some kind of savings plan will give your saving some order, so you’re not just aimlessly trying to put aside some spare cash whenever you have any. Before you do anything else, consider opening a 529 account, which is especially for education. The interest you earn is tax-free, and you get tax deductions for contributions in most states. It’s also a good idea to set a savings goal. You can’t predict exactly how much the average cost of college will be in ten or twenty years time, but you can choose a rough goal. If you’re not sure, you can use an online calculator to work out how much to save.
Explore Different Savings Options
Apart from a 529 college plan, there are other savings options you can explore. For example, there’s a Roth IRA, which is technically a retirement fund account but can be used to save for college too. There are also pre-paid college tuition plans, which can help you save by paying today’s prices. These are useful if your child is going to go to college in-state. You could consider the Coverdell Education Savings Account, which can be used to cover any education costs, including when your child is under 18. A UGMA or UTMA custodial account is used to hold financial gifts for your child, which entirely belong to them when they come of age. So they could choose to use it for college, or they might spend it elsewhere.
Make the Most of Gift-giving Occasions
Whenever a special occasion comes up, make the most of any opportunities for people to give gifts. This applies especially to your child’s younger years when they’re not going to care if they get a contribution to their college fund and a cheaper physical present, rather than something more substantial that they can enjoy now. Lots of occasions can be good times to suggest a small contribution to their college fund from friends and relatives, whether it’s instead of or in addition to another gift. Birthdays, bar mitzvahs and bat mitzvahs, Christmas, Christenings, or even good report cards can all be cause for celebration and gift-giving.
Make Some Investments
Steadily saving money is one way to go if you’re trying to build a college fund. However, if you want to grow your fund further, considering some investments is a good idea. You’ll be able to contribute more to your savings, perhaps for other purposes as well as a college fund. Investing might come with risks, but if you avoid all risks, you won’t be able to save as much. You can get professional help if you’re not sure what you’re doing. After a while, you’ll be more familiar with investing and feel more confident about making decisions.
Balance Out Helping Multiple Kids
Some people do plan on having only one child. However, if you have more than one, you need to think about all of them if you want them to go to college. It’s easy to start a fund for the first child, but then it can all start to fall apart a little if there are multiple children to think about. You might consider opening individual savings accounts for each of them so that you can contribute to them equally. If anyone else gives regular contributions, like grandparents or aunts and uncles, make sure they treat each child equally, even if it means giving everyone less money. You don’t want to give one child what they need for college while leaving two more to fend for themselves.
Consider Investing in Property
It’s interesting to consider the prospect of investing in a property for your child’s time at college. If you have a good idea of where you child will go to college, you could buy a property nearby. If not, you can always wait until they are about to go to college. The property can provide them with somewhere to live, as well as a way to bring in money. However, beware of issues relating to who is in charge. Is your child responsible for acting as the landlord, or is that your job?
Get Your Child Ready for College
Academic performance, as well as sports ability and other skills, are important when it comes to college. Not only do they help with getting accepted, but they are also important in relation to funding and financial aid. It’s a fine balance between encouraging your kids toward academic excellence and pressuring them too much, but it can be found. If you encourage your children to do well at school, they’ll have a better chance qualifying for scholarships and awards based on their performance. It could also give them more choice when it comes to selecting a college. High grades and test scores in all subjects aren’t necessarily everything, though. Look out for what they’re good at, whether it’s sports or art.
Know How Much to Help
Before you start saving, it might be a good idea to think about just how much help you want to give your child. Do you want them to go to college without ever having to worry about money? Or do you expect that they will need to use their late teens and early twenties to learn how to manage money responsibly? Perhaps you might want to help your kids with their college tuition fees, so they won’t be saddled with huge amounts of debt, but you still think they should work to earn their living expenses.
If you want your child to have the opportunity to go to college and you want to help them out, start saving ASAP. They could be paying a lot more than today’s prices.