If you have teenagers, you likely have been spending money on them for years. Clothes, food, toys, doctor’s appointments, camp sessions – it goes without saying that the costs add up pretty quickly. But the biggest expense of raising your children may be yet to come. While there is a wide range of costs depending on the specific college – from a local community college all the way up to a 4-year private university – it can generally be said that second education is extremely expensive these days.
And while parents take a variety of approaches to their children’s college plans – from not helping out at all to pay the full tuition – it is essential, regardless, to have a plan.
From the moment you and your spouse have a child on the way, or maybe even from the time you slip a promise ring on your girlfriend’s finger, college costs are looming, menacingly, on the horizon. Here are some steps every parent should consider:
Have a Plan
From the very onset it’s important to have a plan – and to communicate that plan to your child. Are you not paying for any of their college? All of it? Somewhere in between? Whatever your decision, make sure you have a conception of your financial capabilities and explain them to your child by the time they reach high school. Many parents put some money towards college but expect their kids to cover the rest through jobs, scholarships, and loans. Make sure to discuss all these options at length once your teenager hits high school age.
Save, Save, Save
Unless you know from the start that you won’t be putting any money towards college costs, it’s crucial to put money aside early and often. Research college savings accounts when your child is still a fetus. Start putting money into an ESA or 529 plan shortly after birth. And, just as you want to regularly set money aside for retirement, a percentage of your annual earnings should go directly into that college fund.
No Matter What, Stress that Education is Key
We don’t want to get so caught up in preparing for college costs that we lose sight of the importance of education. If your kid has the option of attending one of the country’s most expensive schools, it may be financially daunting or not the optimal route to take, but it reflects tremendous potential and opportunity in your child nonetheless. Keep this in mind when you save and when you talk to your kids. An education these days may be needlessly expensive, but it is certainly more important than ever if you’re future career demands it.
Ultimately, college costs can create financial burdens that rival those created by home mortgages and retirement plans. And, just as with buying a home and talking to a financial advisor about retirement, preparing for college first and foremost requires having a plan.
I agree when you said, “Education is the key.” When we were young, my parents always tell us that education is the only inheritance they can leave to us because we are not rich. It is our only treasure that no one can take away from us and we can use it anywhere we go.