The price of a college education continues to rise. These days, even a state university can cost well over $100,000 over the course of four years. This will easily double over the next ten to twenty years. Saving for a child's college fund is more important than ever. The earlier you begin, the more you can put interest to work and help offset college costs. If you develop a good plan and start saving early, the money will be there when your child is ready to begin their post secondary education. Here are a few ideas to get your started.
The college fund should be viewed as nearly sacred, only to be dipped into in the case of extreme emergency. the first step is to make sure the college fund is a separate account or accounts. This helps separate the fund from other daily needs and also helps track its progress. Being able to watch the fund progress helps you to stay focused and estimate if you are investing enough.
Since saving for college is a long term investment, optimally one that lasts 18 years, financial instruments such as Certificates of Deposit (CDs) are a viable option that will give you a better return. Generally the longer it takes for a CD to mature, the higher the interest it will pay. CDs also help take away some of the temptation to borrow from the account since the funds will be less available. Money market accounts are also a good way to enjoy higher interest rates than you fin in normal savings account.
Just like in other investments, diversity is a good idea when planning a college fund. Use a portion of the money to invest in the stock market. Though some risk is involved, the fact that you are looking to invest for the long term minimizes that risk. The stock market fluctuates, but over time it is one of the most lucrative investments available.
Don't belittle the amount of money one can save in a piggy bank or dime jar. As you empty your pocket of loose change each evening, put it in the old piggy bank. When the jar is full, take it to the bank and deposit it into the college fund account. 18 years of piggy bank savings can easily add up to thousands of dollars that you will never miss along the way. Coupled with the interest these little deposits accrue over the course of nearly two decades, the change can turn into something substantial.
More and more, success in the world depends on increased education. If you want your child to have every advantage in life, you must ensure that they attend college. Your child can't take advantage of the benefits of time, so it is your responsibility to do that for them. Start saving as soon as possible and enjoy the peace of mind that comes from knowing you are investing in your child's future. Your child will thank you for it one day.
Todd Fletcher has been involved in financial analysis since 2007. Visit http://www.Ratelines.com for more of his advice on money markets.
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