Planning to save for your kid’s education is a marathon and not a sprint, as one of the most expensive things you will provide for your child’s future is a good education. But it doesn’t come cheap. According to Forbes, the cost of a four-year education in 2020 was $19,490 for an in-state university. If you wait to start saving a month before your child graduates from high school, it will be challenging to come up with these funds.
To be successful, you need to start planning for your kids’ education, set up a savings pace, and start investing money as early as you can. This way, you will be ready when your kid is packing to go off to college.
You want to make a plan that can you adhere to it. This may be a savings plan that lasts for years or a decade and beyond. For the best chance at success, read some financial planning tips to help you be successful at planning for your kids’ education and following through with it.
Planning Tips to Pay for Your Kids’ Education
For most people, financial planning for a kid’s education seems like a magical feat. Each time you to the bank, it looks like the bankers are speaking a foreign language. The financial industry has its own jargon.
You can plan for your child’s education, but you may need a few tips to get you started on the right path. With a bit of guidance and practical advice, you can set a financial goal to help pay for your child’s education and reach it. Here’s a look at some of the best financial planning tips to save for your child’s education.
1. Monthly Budget and End Goal
You can’t get where you’re going if you don’t know where that is. This means that you need to decide on a goal and then create a plan for getting there. If you need to raise $10,000 for your child’s education in 10 years, you can do this. However, it’s essential to start now. You don’t want to wait nine years and then try to save up the money in a single 12-month period.
The best way to reach your end goal is to create a monthly budget that includes the savings you need to deposit to achieve it. When planning for your kid’s education savings, consider the ups and downs of your income. For example, you might stagger the monthly amounts to increase each year to reflect boosts in income.
However, be realistic when you create your monthly budget, as it will help you keep up with the savings plan. You don’t want to find yourself in a cycle of struggling, making it easier to abandon the plan to save for your kid’s education and future.
2. Start Early
As you look at your kids, you may wonder how early it is too early to start planning for your kid’s education and how to pay for it. The answer is that it’s never too early or too late. When it comes to saving enough money to send your child to college, you need to save a lot, and the more time you have to save, the more money you can save.
You need to start saving early. Imagine you’re working an entry-level job, and you can save only $5 a week. Over 18 years, it will add up to $4,680 that you can put towards your kid’s education. As your income increase, you can start saving more, but you need to build the habit of saving for your child’s future as soon as you can.
3. Spend Only When Required
There may come a time when you need to withdraw some of the savings you’ve set aside for your kid’s education. It’s okay, as long as it does not become a habit. For example, you may need to spend some savings on items that your child needs to be successful in high school. This might include buying a computer, a musical instrument, or tuition for a private school.
The goal is always to try to maintain your long-term savings goals. This means spending your savings only when you don’t have another way to fund the purchase. If you need to spend some of your savings, try to return to your plan as quickly as possible to ensure that you reach your final goals.
3. Identify Existing Investments
While putting your funds into a savings account at the local bank is safe, it isn’t always the best way to grow your money. You need to identify existing investments. While there are some inherent risks in investments, there are some that are relatively safer than others. If you have a young child, you can make risky investment moves since you have time to recover the funds in later years.
