Preparing to fund a child's flight from the nest into college may be daunting at first. College may seem so expensive that you'll never get there. But saving for college is not an insurmountable task. The following tips can make saving for that flight easier.
Don't Carry On Extra Baggage
Avoid debt. Whether you trim expenses or increase income--or both--saving for college is easier without having to simultaneously wrestle with a debt load.
Imagine being able to save for college without paying taxes on the interest, which would affect how much you have to save. The 529 college savings plans, available in varying states, provide tax-free growth for your college fund in a wide range of investment choices. These funds are exempt from federal taxes, provided the money is used for college expenses proper, and many states provide tax breaks when you use such an account.
Remember to ratchet down the risk as the time draws closer to head to college. Investments that grow money more quickly also tend to carry more risk. In the high school years, gradually make the shift from higher growth investments to more secure investments. After all, if the money isn't there when you need it, you haven't gained much. Good investments just prior to college could include bonds, cash, or money market funds.
Autopilot Can Be Your Friend
Begin saving. Any amount. Time can be your ally if you allow it to work for you, and if you save even a small amount regularly, it will begin to accumulate. Hope is a powerful motivator, and seeing tangible results on a regular basis will help to keep you focused on success.
One of the best-known financial tricks around is to turn this process into something that happens automatically, without having to make a decision every single month about whether to save for college. This automatic savings method will enable your money to grow in a painless fashion.
It Doesn't Have to Be a Solo Flight
Teach your children financially savvy habits, even while they're young. College living expenses can balloon when students have poor money management skills. Will your college-bound senior know how to track expenses, or how to live within a budget?
Your child can help with college savings by contributing to his or her college fund with money earned during part-time or summer work in high school. You can match every deposit made as a way to provide incentives for saving.
Consider other sources of financial aid, too, such as grants and scholarships. These types of financial aid don't have to be paid back.
As your child enters high school, start looking into scholarships and their requirements. Based on your student's interests, you can learn what scholarship award committees are looking for in successful scholarship applications. Your student can then look for opportunities to be involved in those activities that will shape their future success.
It's a time-honored American tradition to work a part-time job in college, whether that is during the academic year, or during the summer break. Your child will gain valuable life skills and learn more about the world of work.
If grandparents or other family members would like to give money towards a college fund, rather than gifting clothes or toys, encourage them to do so.
Author and career advisor Jenny Masterson also contributes content to thebestcolleges.org, an informational site featuring college rankings as well as lists of specialty college programs such as online criminal justice masters degrees.