September is College Savings Month!
How are you doing on your money plan? Now that you’ve created an emergency fund, what are you doing about saving for your child’s college expenses? In my job as a financial aid advisor, I see too many families borrowing student loans to pay for college. Remember Fail to Plan, Plan to Fail? Without a plan, these families have no choice but to borrow student loans to pay for college. They are learning the hard way that their lives have been negatively changed, maybe for life. The student is finding that she/he can’t buy a house or new car and the parents are finding that they can’t pay off their own debts and need to delay retirement.
Ideally, parents should start saving for their child’s college expenses when the child is born. They can leverage the amount that they save by starting early. Save small and then increase the amount as the years go by. If your child is older, start now.
The key is to start.
Whether you’re able to save for all four years of expenses, or only one year, you are saving. You’ll reduce the amount of student loans to borrow or avoid borrowing altogether.
If you’re planning to attend college, you should also be saving for college expenses and not borrowing student loans. Start now before you enter college. Save as much as you can while you’re still working.
How to save money.
There are a few ways to save money. Traditionally, people save money in a savings account at their bank or credit union. When they’ve saved enough, they can move the money into a money market or certificate of deposit (CD) account to increase the return on investment. Your emergency fund can be saved in a traditional savings account. When you’ve saved enough to move the money into a market account, think about doing it because money market gives a higher return on investment than a regular savings account. In addition, your money remains liquid; so, you can pull out the funds when needed.
You can use these methods for saving for college, but there are better methods and I’ll tell you why in my next blog.
Stay tuned for my next blog. Please share my blog with your friends.