- On 10 May 2010
- By Chiante Mataitusi
When and How Much Should Parents Start Saving For College
Financial Preparation For Your Child's Education
Have you estimated what it will cost to put your son or daughter through college?
Putting Money Away For College
Every year scores of parents send their children off to college or university to get the education they need. The colleges their children will go to may vary from region to region. The one thing which will not vary is the fact that they better have the right amount of money stashed away.
Not having enough money is a problem that far too many parents run into. Parents are often left to wonder how they are going to pay for their child’s college education as well as where and when to start saving for college.
Often, not being sure about where to get financing leads to costly student loans or other short term loans to get the money necessary to earn a degree. These kinds of maneuvers can be avoided as long as the right amount of planning is made by parents in the first place.
Average costs of college
When looking at the costs for college, it is important to remember the amount you will spend will depend on what kind of college your child is going to. The lowest price per year is the two-year associate degree or community college. This kind of college charges about $2,500 per year. In the middle of the road is the public four-year bachelor degree college. This kind of college charges about $7,000 per year. The most expensive college by far is the private colleges which charge on average $26,250 per year. Regardless of what college your child goes to, they will have to also pay for books, boarding and maybe even out-of-state charges.
How much an average parent spends
With the cost of education constantly on the rise, parents are spending more every year. You need to know how much the colleges are charging now for children to go to school, before they apply for college, so you can start saving up the money they need to go to school. While your money will earn interest while it accumulates, you will need to project a goal which exceeds what the national averages are right now. There are handy calculators online which will help you to understand exactly how much you can expect to pay. Keep in mind if you have to take out loans, the amount you pay goes up dramatically.
Saving in advance
Since the best way to spend the least amount of money is to save the amount of money you will need in advance, you need the right plan to save money. Most parents will simply open up a savings account and keep throwing money into it. A good idea is to set a plan in which you set aside a specific amount every paycheck for the college fund. The earlier you get started, the less you will have to take out of each paycheck.
You can earn more money on your savings with high interest CDs. These are great ways to save money because there is no risk involved. If you can find one with a high rate, you will be able to get a solid return on your investment. Best of all, you will not need the money until your child goes to college, so you have a pretty good idea about how long the CD should be for. Remember, the longer the CD maturation, the more you will earn in interest.
Saving money for college does not have to be hard as long as you have the right plan. Discover the amount you will need early and plan correctly and, as a parent, saving money for college will be easy.