When you first welcome your new bundle of joy into your family, it’s easy to get caught up in the excitement of the baby stage. Everything is new and it’s a time filled with firsts. This isn’t usually the time you start to think about saving for your child’s future education. So, if you’re not doing it when your child is born, when is the best time to start saving for your child’s education? If you wait too long does it just become too late?
Here’s a look at some simple financial advice for parents wondering when the best time is to start saving for their child’s education.
All you have to do is take a look at the average annual tuition fees for schools in the US and you'll see that it was $33,215 in 2016. Now, clearly this is no small number, and it’s not likely an amount of money you can save over the span of just a couple of years. So, what this means is that the earlier you start saving, the better. Even if it means you can only afford to save a few hundred a year to start with, it’s still something.
The fact that those savings will be earning compound interest over the years can really help to give that fund a boost.
So, what happens if you can’t or haven’t started saving since your child’s birth? Is it too late? The fact is that it’s never too late to start saving because every little bit will help to bring the cost of tuition down.
Investing can prove to be a great option for those who start saving early to really kick off their savings and take advantage of the compound interest over the years. As well, if you look at more aggressive investments with higher risks, they may be able to pay out higher and faster, which can help if you start saving later.
If you’re thinking of investing to save money, be sure to follow the latest financial markets news and speak to an investment advisor who can help you pick the right investment vehicle.
Because many parents don't have all kinds of extra cash lying around, it usually comes down to a question of what makes the most sense to save up for. Many couples find themselves asking if they should put their savings into their retirement fund or in an education fund.
Obviously, the ideal answer that most financial experts are going to give is that it’s not wise to choose between the two. Instead, find a way to save for both. Unfortunately, for many families, it’s just not possible. When it comes to choosing between the two, the retirement savings usually makes more financial sense. There are scholarships and educational loans, which can help make college or university happen.
It really doesn’t matter if your child has yet to be born, is a couple of years old, or just approaching their teenage years; it’s never too late to start saving and planning for their future.