From buying cribs and diapers, to baby clothes, to cutting back hours, having a child borne into the world will surely cost a lot of money. This is why most parents-to-be save up long before the child is due. All the hoopla, however, almost always overlook one thing: college.
Most kids don't go to college until they are about eighteen years old. For parents, that time seems too far away to worry about. However, according to You and Your Family, it is actually better to start saving up for your child's education even before he is born.
We may be in college, but thinking about a college fund if you want children is another baby step! pic.twitter.com/2bPw0wxyvx
— UNH Student Success (@UNHSuccess) February 25, 2016
"It's not easy to determine precisely how much money you'll need to have set aside for college," Joseph Hurley, author of 'Family Guide to College Savings' said. "The cost will depend on which particular college your child chooses to attend, how many years or credit hours it will take to graduate, and how much scholarship and grant aid may be available, including any financial help offered by grandparents or other family members."
Consider the cost of going to college: an average cost per year goes up to $25,000 with annual increases in costs and aftertax investment returns - it's going to cost about $645 per month if parents start their savings when their child is two years old. The longer the wait, the more the amount is going to increase.
The cost of sending a child to college is enough to deter most parents, but the biggest mistake many make is that they think they have plenty of time to get serious about saving. Others, on the other hand, think any attempt in doing so is futile, while there are some who rely on financial aid.
These ways of thinking, according to Hurley, is misguided. "Parents should start early even if they can save only $25 per month for college."
There are also other ways to save up for a child's college tuition. Among the suggestions from Baby Center include 529 College Savings Plans, Prepaid Tuition Plans, Coverdell education savings accounts (ESA), custodial accounts, and IRA and Roth IRA accounts. Looking into each one will give you a better sense of which works better for your budget.
