Not everybody is in a position to start saving for their child’s college fund from the moment they’re born. After all, there are a lot of expenses to cover while the child is still young. Now you’re older and wiser, and your child is showing academic ability, you may be panicking about covering the tuition fees. This is just the first part of the college fund trap. Worrying and panic buying investments simply won’t help. What you need is a plan.
The trouble with kids is they need you to buy them things. What you don’t realize when you start planning your family is that the college fund won’t be your biggest expense as a parent. There are hundreds of other purchases you will need to make before you start looking at Universities. For every dollar you save, you’ll spend another on clothing, driving lessons, cars, summer camps, music lessons… the list goes on and on.
Then, of course, are all the unforeseen expenses. The boiler breaks down, or a storm floods the house. Before you know it, you’re dipping into the college savings just to make ends meet. This is the trap of having one. What you need to do is protect it. You could choose a savings account that won’t mature until your child reaches 18. Or you might instead choose to make a few lifestyle adjustments to reduce your reliance on that pot.
Life is expensive, but you can drastically reduce the cost of everything in it. Start in your own home. You may not be a fan of frugality, but you might be quite keen to pay less for your goods and services. Start with online shopping coupons from somewhere like DontPayFull.com. Discount vouchers could reduce your monthly shopping bills, and encourage you to shop smarter. Perhaps you’re interested in reducing wastage? Figure out how much you really NEED to buy and stop buying the things you don’t.
Once you’ve set up your college fund savings account, don’t fall into the trap of ignoring it. Monitor the growth and interest rates you have. Don’t be afraid to shop around and find better rates elsewhere. Choosing the right investments and diversifying could help you grow that pot quicker. It might be much bigger than leaving it in a tax-free saver account. Call your financial advisor and see what products could be best for you.
The fund for your child’s future will soon grow if you’re strict with your payments. It’s easy to cut if you’re running short and that could be another trap you’ll fall into. This is especially true if your child is only young and college feels so very far away still. Missing payments means your fund won’t grow at the rate you need it to. Set up a payment plan on your current account to make a regular payment. It might be small, but keep it going every month.
Saving now may mean making some sacrifices now. You may need to cut down and smarten up when it comes to your investments. Your child’s graduation ceremony will make it all worth it.