The Importance of Starting Early when Saving for Your Child's Education
This article illustrates the importance of starting your savings early on in your child's life if you want them to have a good college education. The earlier you start the better.
Like most parents, you want your children to have the best education possible to prepare them for their adult life. The problem is that the cost of a college education is becoming increasingly prohibitive.
It seems somewhat ridiculous to be thinking about a college education when your child is just a baby but the reality is that the sooner you start saving, the better chance you have of being able to afford the best education possible.
As the cost of tuition increases, currently at the rate of around 8% per annum, it is very important for parents to start saving for college as early as possible in their child's life. Just $50 per month put aside from the time your child is born, will result in savings of $20,000 by the time the child turns 17 assuming a return on investment of 7%.
Expenditure on your child's college education could well be one of the largest outlays in your life. Obviously if you have more than one child, this expenditure is multiplied.
It is important to have a savings goal in mind so you know how much you need to put away. The more time you allow yourself to save, the better, as you will have the power of compound interest working in your favor.
There are a lot of different options now designed to help parents save for their children's college education. For example Section 529 college savings programs as well as Coverdell education savings accounts are specifically designed to assist parents to save for their child's future education. These programs are over and above the traditional options such as savings accounts, US Savings Bonds, annuities and suchlike.
A rule of thumb is that you should save approximately one third of what you would expect to outlay during your child's college years. One third will come from current income and financial aid during college years and the remaining one third will be in the form of a combination of parent and student loans.
It is important not to be overwhelmed by the size of the figures involved in paying for a college education. There are millions of other people in the same boat and if you are prudent about your savings program, you will start feeling in control. Start saving as much as you can even if it is not much and you will be surprised at how quickly it builds up.
Sue Taylor is the webmaster of several financial sites. Refer to http://www.savingforcollegesite.com for further information and resources about college savings.
It seems somewhat ridiculous to be thinking about a college education when your child is just a baby but the reality is that the sooner you start saving, the better chance you have of being able to afford the best education possible.
As the cost of tuition increases, currently at the rate of around 8% per annum, it is very important for parents to start saving for college as early as possible in their child's life. Just $50 per month put aside from the time your child is born, will result in savings of $20,000 by the time the child turns 17 assuming a return on investment of 7%.
Expenditure on your child's college education could well be one of the largest outlays in your life. Obviously if you have more than one child, this expenditure is multiplied.
It is important to have a savings goal in mind so you know how much you need to put away. The more time you allow yourself to save, the better, as you will have the power of compound interest working in your favor.
There are a lot of different options now designed to help parents save for their children's college education. For example Section 529 college savings programs as well as Coverdell education savings accounts are specifically designed to assist parents to save for their child's future education. These programs are over and above the traditional options such as savings accounts, US Savings Bonds, annuities and suchlike.
A rule of thumb is that you should save approximately one third of what you would expect to outlay during your child's college years. One third will come from current income and financial aid during college years and the remaining one third will be in the form of a combination of parent and student loans.
It is important not to be overwhelmed by the size of the figures involved in paying for a college education. There are millions of other people in the same boat and if you are prudent about your savings program, you will start feeling in control. Start saving as much as you can even if it is not much and you will be surprised at how quickly it builds up.
Sue Taylor is the webmaster of several financial sites. Refer to http://www.savingforcollegesite.com for further information and resources about college savings.
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