College savings expert Andrea Feirstein, managing director of New York-based AKF Consulting Group, urges parents to set aside these reservations and start planning to save today.
"Time is your biggest asset when saving for the long-term," she says. "Even small initial amounts will add up and can grow as your child grows."
Financial planners warn that saving for college ahead of time is a worthy goal because the amount of debt many students are accumulating because of loans is staggering. Many students will take as many as 10 year to pay off their student debt. Such a burden diminishes from a graduates future. It's time to end this debt crisis and save for college. Paying cash and staying away from debt is starting to be a growing trend out of necessity because the amount of interest is soon due to double and the 6 month waiting period for payments to start is being eliminated.
Feirstein offers five tips on how to "find" money to save:
- Start with small changes. Bring your lunch to work and save as much as $50 a week, depending on your habits. Scale back on or eliminate luxuries like magazine subscriptions, monthly manicures and premium cable channels.
- Open a tax-advantaged 529 college savings plan and ask family and friends to contribute to your child's account in lieu of birthday and holiday gifts.
- Create a family matching plan in which your child puts part of their allowance, earnings or gifts into a savings account and you match dollar-for-dollar (or more). This will also help your child with their own good savings habits for the future.
- Set up a direct deposit to have a small portion of your paycheck to go directly into a college savings account.
- Take account of all your spending. Make a spreadsheet that buckets every single dollar you spend. Review it every month to see where you can divert money into a savings account.
With a time frame of 18 years to save for the goal of a college education any small amount of savings will later translate into a nice nest egg to draw off of when college time arrives.