Parents, Start Saving Now!
I've been reading where financial planners say they often see people concerned about saving for college when their kids are in high school, and I keep hearing about the parents who haven’t saved a penny for their kids’ education! This has me worried, so I did some research.I've been reading where financial planners say they often see people concerned about saving for college when their kids are in high school, and I keep hearing about the parents who haven’t saved a penny for their kids’ education! This has me worried, so I did some research.
How America Saves for College 2009 (from SallieMae and Gallup) reported only 60% of parents have started saving for college, while less than 30% are on track to reach their savings goals. Less than 1/3 saved automatically, and over 1/3 saved “when budget allowed”. Those with less than $50K in annual income saved a higher proportion of their income for college than those above $50K. Also, parents with kids 12 and under were more likely to have saved than those with teens.
Interesting numbers, but unacceptable numbers!
Start now... Seriously, start saving now. And if you’ve already started, consider increasing what you’re saving. Call or e-mail your bank tomorrow and have it taken out of your check before you even see it - automatic withdrawal/transfer, whatever. You will only feel it for a month or two, then you won't even notice the difference. $10, $25, $50, $100, whatever you can afford (each time you get paid)! Regardless, it will add up and give you something to help pay for school later on. Then, of course, don't touch it - no matter what! It's for them, not you! Tell their grandparents about their college account, as well as any other relatives or close friends who might be inclined to contribute to it (birthdays, Christmas, Bar Mitzvah, etc.).
Don't even try to figure out what college is going to cost. The figures are staggering, and, I think, can cause parents to be intimidated and not save at all. Just save. Do the best you can do and you'll be better off (and your kids will be better off)!
There are several different ways to maximize what you save - 529 plans, Roth IRA's, Educational Savings Accounts (ESA's), CD's, Stocks, etc. If you're interested, contact a financial planner (I’ll privately recommend some trustworthy folks if you don't know anybody). They can help you set and accomplish whatever goals you want. But the bottom line is JUST DO SOMETHING! And do it NOW, before you forget or think of something else to do with the money.
Students – you don’t get to just sit this one out! You bear some responsibility in paying for college too! Not as much as your folks, but still some. If you don’t have an account yet, ask your parents if they’ll start one. Talk about how you can save also. During the summer before college, you’ll need to save virtually everything you make, but you need to start earlier too. Every dollar you or your parents save now is actually more than a dollar (including interest) somebody won’t have to pay back after college!
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