Save For Your Kids’ Education Without Panicking
The following was written by Gary Rawlins:
If you’re failing to sock away money for the kids education, you’re not alone.
Only about half of parents with kids under 18 are saving for college. And even those with college funds are saving less than in the past, according to the How America Saves for College survey done for lender Sallie Mae.
Parents who are saving for college earmarked 10 percent of total savings for college in 2015. But the amounts overall declined to a three-year low. Average amount: $10,040.
The rising cost of college education can feel incredibly daunting and intimidating. But, as with most financial goals, starting to save today is the best way to cope with the costs of the future.
Here are several ways to start making progress toward a college fund for your children’s future:
Commit to start saving now: To reduce anxiety, use a financial adviser, preferably one with the Certified Financial Planner designation.
The national groups of financial planners that offer searchable databases: the National Association of Personal Financial Advisors, The Garrett Planning Network, the Financial Planning Association and the Certified Financial Planner Board of Standards.
Use an online calculator to set a realistic savings goal: There are several to choose from, including Choosetosave.org and The Ballpark E$timate online calculator from the Employee Benefit Research Institute site.
Start a tax-sheltered 529 college-savings plan: You can open a tax-sheltered 529 account with a child as beneficiary for as little as $25 in many state.
“The ’best’ 529 plan is dependent on an individual’s specific needs. In order to determine which education savings vehicles are best suited to your needs, speak with a financial advisor to map out your plan, set goals and establish the necessary steps to get there,” says Sean Wilson, director of Integrated Product Solutions at TIAA.
Make your savings automatic: You can ease the pain by having cash automatically and regularly deposited into your college savings plans from paychecks, says Kerry Hannon, a personal finance expert and member of TIAA’s expert panel on Woman2Woman. Most employer plans and 529 providers let you set up this automatic approach.
Check out the Savingforcollege.com site for more information on 529 plans.
Put your raises into your college savings plans.
Investigate college financial aid options: Check out sites such as FastWeb and FinAid to find what’s available.
Whatever you do, do not raid your 401(k) retirement plan, Hannon warns.
“True, we all want the very best for our children, but … it is far more important to save for your own retirement. Your child can take out loans for college, but no one is going to lend you money to fund your retirement.”