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Saving for college is not something we want to think about when the budget is tight. But the fact is, procrastinating is not a solid financial strategy. Today, welcome Jenny from Mom Loves Best as she shares why we can’t afford to delay college savings.
ALSO READ: Teaching Children About Financial Planning
It’s practically a cliche to say that children grow too fast.
During those early years it feels like their adulthood is a lifetime away, so why should you bother with saving for college today?
Sadly, the reality is that one day you’re changing their diaper, and before you blink they’re grabbing your car keys, crossing the stage at their high school graduation, and getting ready for the next chapter in their lives. It really does go by faster than you think, so here are six reasons why you should start saving for college today.
1. Habits are hard to break.
You’ve heard that old habits die hard, so use that to your advantage and start a good one.
While it might be tough to get the ball rolling, if you get in the habit of saving early it will become a part of your routine, and you won’t think twice about doing it regularly down the road. Saving becomes simple if it’s a habit.
2. Time (and compounding interest) is on your side.
It might feel too early, but this is actually your biggest financial advantage. Even the smallest amount of money saved adds up over time – and the interest compounds over the years, too!
Don’t waste this valuable time; because of compounding interest the money you put away now is more valuable than the money you’ll put away ten years from now.
3. You can’t predict the future.
It’s easy to envision a future where you’ll be more financially comfortable than you are today, allowing you to pay for your child’s educational expenses with ease. And yes, that is the trajectory – and goal – of most families. But the truth is that life is unpredictable and unexpected things happen that can wreak havoc on a family’s finances: layoffs, emergency home repairs, devastating illness, divorce.
Relying on future income to fully fund your child’s college expenses is short-sighted; it’s poor planning to put all of your eggs in that basket.
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4. You’re helping to ensure a better financial future for your kids.
College students are graduating with an increasing rate of student loan debt – and 55% of borrowers in repayment aren’t even reducing their loan balance! That’s a huge burden on a young adult entering the workforce and trying to start their life on solid financial footing.
Starting a savings plan today will help offset your child’s need for student loans in the future, giving them a financial advantage as they begin their adult life.
5. You can lock in today’s college rates.
College tuition is increasing by an average of 3.5% each year over inflation. That means, in 18 years, college tuition will cost nearly 70% more than it does today.
If you choose to save for college by buying into a state pre-paid tuition program, you can purchase tuition at today’s rate that your child can use when they attend in the future – at a time when the price-per-credit is practically guaranteed to be significantly higher.
Participating in this savings plan now, instead of waiting to start saving in the future, can yield significant financial savings.
6. You won’t have to rely on scholarships.
Many parents believe they’re raising the next great sports legend, because of course, our kids need us to believe in them. But the truth is that only about 2% of students actually receive sports scholarships at NCAA schools.
Instead of sinking thousands of dollars over the course of their childhood into intense sports leagues, gear, competitions, and lessons, consider banking that money to fund your child’s college education. The payoff is likely to be much, much greater.
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There will always be a reason to put off college savings.
“We’ve got plenty of time.”
“We don’t make enough money to save right now.”
“We’ll start next year.”
But the truth is that time marches on and before you know it, the day comes and you find yourself wishing you’d started sooner.
Start small if you must, but start NOW to ensure the best future for your child. You’ll never regret starting too early, but you’ll definitely regret starting too late.
Jenny is just another mom trying to do her best. She loves trying to find new ways to save money, making lists and helping others find what they are looking for. You follow her on Pinterest or read about her journey through parenthood, the struggles and triumphs of breastfeeding & more on her blog, Mom Loves Best.
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