You want to give your child the best opportunities in life, and in today’s world that means allowing them to pursue a great education. For most well-paying jobs and virtually all professional careers, a college education is necessary. Most employers require at least one degree and in a competitive job market employees with a higher education have an advantage.
Going to college costs money, however, and tuition, as well as living costs, are always on the rise. By the time your child is headed for college, the cost will be even higher than it is now. Luckily, there are a few ways you can prepare for this expense, starting now:
- Use the 2K rule to determine how much you will need. This rule asks you to multiply $2000 by your child’s age to determine how much you need to save. For example, if your child is two years old, you will need to save and invest $4000 towards their education to have some savings for an in-state four-year college. You can also use the Money Help Center’s college cost calculator to calculate how much you will need.
- 529 college savings plan. This tax-deferred state plan lets you save for your child’s education and may even be tax deductible in your state. The money grows safely and steadily until your child is ready to go to school.
- Prepaid tuition plan. This is another type of 529 plan, which allows you to guarantee and pay for the current tuition at your in-state school. This way, even if costs increase rapidly, you will not have to pay more.
- Ask your child to get an after-school job and save a portion of their earnings for college. It’s a great way to teach good work ethic and can even look great on a college application, all while helping your child get more money for school. Set up a budget with your child and put aside college savings each month into a 529 plan or other plans.
- Encourage your child to do well in school and to pursue their interests. Schools offer financial aid to students near the top of their class and to students who show aptitude in sports or certain subjects. If your child qualifies, get them to take AP classes so they will defray the costs of their first year of school.
- Start applying for financial aid early. Research financial aid options before your child even enters high school, if possible, so you understand what you need to do to get bursaries and scholarships. You can also start applying for scholarships very early. Some scholarships and contests for children are geared towards very young kids, so start researching them early. Your child’s school’s guidance counselor may have more information about scholarships and options available for you.
Saving for your child’s education starts with knowing how much you’ll need. Money Help Center has created a college affordability calculator to help you come up with this number so you have a clear goal to aim for. We also have other unbiased calculators to help you make the big decisions about school and funding.