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GUEST COMMENTARY: Saving for higher education may be easier than you think

Sunday, August 18, 2013 | 6:00 a.m. CDT

Summer is coming to an end, and parents everywhere are preparing to send kids back to school. While it is easy to get caught up in the hectic preparations for the first day of school, it is also important to remember what all of this is for: preparing our children for adulthood. The world is changing around us, and we must change with it. Now more than ever, some advanced training or a degree beyond high school is required in the workplace.

I was the first person in my family to attend college, and I know firsthand how the experience can change lives. As a father of two teenage daughters, I want the same opportunities for my girls. To that end, my wife and I have been planning, saving and investing so we can help them get an education and follow their dreams. While there are a variety of higher education options out there – community college, trade school, vocational school, a four-year degree – they can all be very costly.

Saving for our children’s higher education can be overwhelming, and at times it can seem like there is no way to save enough. I have put together a list of tips that focus on small investments which will add up over time to make an impact on those future costs. Even the smallest effort can make a big difference. Here are my top 10 tips to help make saving for higher education easier:

  1. Start early and save regularly – Start when your child is young and add higher education savings to your monthly budget. Saving a little money each month over time adds up. For example, saving just $50 a month from birth would yield about $20,000 by the time your child is ready for college, assuming a 7 percent return on investment.
  2. Open a MOST 529 account – For as little as $25, you can start an account with MOST–Missouri’s 529 College Savings Plan. MOST helps take the guesswork out of picking an appropriate mix of stocks and bonds by offering age-based options. MOST chooses the funds based on your child’s age and your risk tolerance. Regardless of the eligible higher education option your child chooses – a community college, trade school, vocational school or a university – withdrawals from a MOST 529 account can be put toward tuition, books and other qualified expenses.
  3. Make saving and investing “automatic” – Make allotting part of your paycheck for higher education savings easy by setting up payroll deduction or monthly automatic bank transfers to your savings and MOST 529 accounts.
  4. Ask for help – Holidays, birthdays and special occasions can be celebrated with more than a new toy. Ask family and friends to contribute to your child’s higher education savings account.
  5. Make a monthly budget – monitor what you spend for two months. Sit down and analyze your habits and prepare a budget. Look at what you need, what you want and those special splurges. MyMoney.gov has tools to help you create a budget.
  6. Consult a cost calculator – Although you may not be able to cover the entire cost, a higher education cost calculator can give you an idea of what you will need to save toward your child’s education.
  7. Set savings goals – Having a goal will help motivate you to save and help you stay on track.
  8. Revisit your budget regularly – Make it a point to regularly review the amount you can save. For example, if you have a budget expense that decreases or stops, consider directing those funds to your higher education savings.
  9. Involve your children – Encourage your children to put a portion of their money toward their higher education savings.
  10. Check your investments regularly – Many college savings plans allow you to choose how you invest and provide news related to your college savings that may help you as you continue to save. Don’t be afraid to change your investment strategies as your personal financial situation changes.

Studies show that when people are confronted with the cost of higher education, they often assume that they cannot save enough and decide to abandon saving for higher education altogether. Although it may not be possible to save enough to cover everything, this does not mean you should not save anything. It is possible to save enough to pay for a significant portion of the cost, and the rest can be handled by financial aid, work-study, a job and loans.

Covering the cost is not the only goal of saving. By saving for your child’s higher education, you also show your children you believe in them. Research shows that students whose parents saved for their education are more likely to complete a degree. Every child deserves the chance to pursue higher education and be successful. They should not be buried under a mountain of debt to do it. Talk to your children, be honest about what you can afford and help them understand the financial aid options as a family. By starting early, talking regularly and working together with small investments along the way, you can help your child reach their dream.

Clint Zweifel is the Missouri state treasurer.


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