From the first moment you meet your child, your primary concern is providing for their life and future. You give them everything you can in hopes that they’ll grow up to become happy, capable adults that can thrive in the world. And it certainly feels like every decision you make can determine whether that future comes true. What preschool they go to, whether they sign up for dance or art class, and what they wear to their first day of middle school are all decisions that weigh on parents in hopes that their child will grow up to be happy and successful.
However, one of the most significant decisions a child will make is how they spend their post-high school years. A college education is one of the best ways to set them up for the future, which is why most parents set aside a college savings fund to help them realize this dream when the time comes. If you want to be able to give your children peace of mind knowing they’ll be able to go to college without thousands of dollars in student loans, the time to start saving is now.
The Best Time to Start Saving Is Today
Whether your child is just taking their first steps or if they’re getting ready for high school, it’s never the wrong time to start planning for college. However, depending on their age and goals for the future, you may need different financial strategies to ensure they can do exactly what they want in the future. Below are various strategies you can use to start saving for your child’s future, depending on their age and your goals for their college savings:
- For young children – If your child is a toddler or preschooler and you’re already thinking about college, good for you! The sooner you start saving, the less you’ll have to contribute to their college savings account every year. Even a small percentage of your monthly income will add up over time and be able to cover most or all of the cost of their education no matter where they want to go.
- For middle and high schoolers – You’re not behind if you start saving later in your child’s life. In fact, you may have an easier time planning because you have a better idea of what your child will want and need in the future. If they are at the top of their class and already have plans to go to a higher-level school or degree path, it’s a good idea to use a fast-tracked savings strategy and start looking into scholarships they can use. However, if your child is still figuring things out, you can tailor your savings plan so that you save enough without putting a dent in your current budget.
529 and Prepaid College Plans
These savings accounts are the most common and most financially-savvy ways to save for college. A 529 plan allows you to make investments that go directly toward educational expenses, including tuition, books, fees, and boarding costs. When using these plans, you can withdraw money for education-related expenses tax-free, which makes them more suitable for college savings than other investment accounts or a traditional savings account.
Some universities also offer prepaid plans, which allow your child to attend later in the future for the price of tuition today. With the rising cost of education, investing now is a great way to save in the future. Plus, you can cash out many of these plans if your child decides to go out of state or receives scholarships to cover the cost of their education.
No matter how old your child is or what their future may look like, saving now puts them ahead of the game for when they’re ready to further their education. If you’d like to learn more about savings options for your family, talk to your OneAscent advisor today.