Some parents start planning for college costs soon after their baby is born. While it may seem premature to be thinking about higher education expenses before your child even starts talking, it’s never too early to begin saving. No matter where you are in the college planning process, you can still prepare for future costs.
Getting an early start on saving for your child’s college education is a smart move because tuition costs have increased at a much higher rate than the overall inflation rate for several years. When you start saving for college while your children are still young, you give your savings time to grow.
Even setting aside a small amount each month can quickly add up. The college years start to feel much closer once your children are in elementary or middle school.
This is a good time to evaluate your college preparedness. If you haven’t started saving yet, you probably should begin at that point. If your savings aren’t on track to meet your goal, you may want to start saving more. Increasing how much you save each month can make a big difference in the amount you accumulate over the next several years.
You may want to consider including investments that have the potential to earn higher long-term returns. Keep in mind that as your student moves from middle school into high school, saving for college becomes a short-term goal. You might want to gradually transfer assets from higher-risk investments to more conservative ones at that time, since your money will have less time to recover from any losses.
Once your child is in high school, discuss his or her career plans. Meeting with your child’s guidance counselor may be helpful in determining what colleges are suitable options. At this point, you should have a good idea of how much money you’ll be able to contribute to your child’s education. When your child applies to college in his or her senior year, that is also the time to apply for financial aid. Before deciding on a college, make sure you and your child compare financial aid offers. Also, encourage your child to apply for as many scholarships and grants as possible.
Article is adapted from content provided by DTS.
