Saving For Your Child's Future College Expenses

Have you been thinking about your child's future recently? What college do you want your child to go to? What are the costs involved? Do you have the financial resources to send your child to the preferred college? These are important questions that need to be asked while your child is still young.

The costs of sending a child to college can come up to quite a substantial amount. The actual cost will depend on several factors. For instance, the choice of college will have an immediate impact on the cost. Some courses will cost more than others. Or what if your child needs to stay in college an extra year due to illness just so he or she can graduate from college successfully? These variables all play a part in the cost of education. As a parent, your role is plan ahead for your child.

Let's say you have calculated the cost of education to come up to about $100k for the entire duration. Do you have the entire amount stashed aside solely for your child's education? Would $100k be enough to set your mind at peace? Most people do not have the entire amount stashed away somewhere. When the time comes for your child to pick a college, will you have enough for him or her? If you don't, the consequences can be disastrous. As parent, you want your child to be happy - to be happy to pursue his or her own interests and not have to worry about not being able to land a job. The right college will make all the difference to your child's future. Having the financial resources to send your child to the right college may appear to be a formidable goal. But it can be achieved with proper planning.

What you want to do, is to sit down and think about saving up for the future. A portion of your monthly income should be set aside solely for the purpose of financing your child's college education. Note that education costs are always on the rise. So when planning ahead, make sure you take into consideration inflation and the rising cost of education. A qualified financial planner will be able to help you compute the exact amount you need to set aside each month to achieve your targets.

A few things to remember. It's always wiser to start early than to start late. When time is on your side, you can put aside a much smaller amount each month and still be able to save up enough to meet your financial objectives. If you start late, you will be forced to set aside a huge amount of money on a monthly basis - something that you may not be comfortable with as this may affect your current lifestyle.

Learn more from a financial planner specializing in 401k rollover and Roth IRA Rollover for retired individuals.

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The Best Investment to Start Saving for Your Child's College Tuition

One of the biggest issues for new, or relatively new, parents is how to pay for their child's future education. It is no secret that the cost of a collegiate education is skyrocketing. The average cost of tuition for four years at a public state university has risen to around fifty thousand dollars. For private schools, this number can exceed two hundred thousand dollars. With a rising percentage of students taking five or more years to graduate instead of the traditional four, this number can be increased by twenty percent or more. And these are 2011 prices - just imagine what they will be in 2029, when today's new children will be at college age! Parents have to prepare as if these costs will continue to rise.

Not long ago, saving for a child's education was a luxury more than a necessity. Students could always take out loans and pay for their own education, then pay it out over a few years after they get a job. In today's world, this leads to students being saddled with a ton of debt coming out into an uncertain job market. This is not an ideal scenario that any parent would want for their child. The ability to pay for an education straight up is more important now than ever before. As loan debts and interest rates on that debt rise over time, this becomes even more important.

So, how should parents save for this huge cost going forward? I am not about to make specific investment advice, especially in this economy. Rather, the best solution is to put a certain amount of money away from each pay check and invest it into safer investments for that have lower returns, but much less risky. This way the number not only will grow with monthly allotments, but the money will also compound on a regular basis growing on itself.

Not to venture into a finance lesson, but this is best displayed through a hypothetical scenario. We will start with the month of a child's birth. Let us assume a take home salary of $3000 per month. Let's put 5% of this ($150) into the college on a monthly basis. For the purposes of this study, we will ignore the possibility of any future raises or escalators. Obviously those would significantly help the contribution. We can put this money into a safe steady growth fund - for the purposes of this hypothetical, we will say 3% annually. This amounts to 0.25% per month.

I will not bore you with the financial equations, but after 1 year, this account will have grown to $1824 on a principal of $1800 monthly installments. Within 2 years, this account will have grown to $3705 (on a principal of $3600). Within 5 years, the investor will have almost $9700 on a principal of $9000. After 18 years have passed, this account will have accumulated almost $43000. Now, that is a pretty nice nest egg to apportion to your child's education. Obviously, if you contribute more or net a higher rate of return - this number will be significantly higher.

How do you intend to save for your child's college education? Or, even more expensive, medical school tuition? Here's an article on the rising numbers from Chicago Tribune. Learn more about financing here.

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