As parents we all want whats best for our kids, and providing them with a solid education is a huge part of that. But as you have probably noticed, the price of schooling (along with everything else) is rising, which can be challenging in the future if we’re unprepared. This is where wise financial planning could help, here’s what you can do to make sure your child’s education is covered.
Why Education Costs Are Rising
The cost of education has been rising more quickly than the cost of necessities. There are tuition costs, books, housing costs, and more for anything from elementary school through college or specialised training. These expenses may really mount up without a plan in place, and no parent wants to be worrying about that.
Start Early to Make It Easier
Starting to save early is like giving yourself a head start. The trick here is to learn about compound interest. This allows your money to grow over time if you invest it wisely, so the sooner you start, the more time your money has to grow.
Setting Up Your Savings Goal
What type of education do you want to be able to provide for your child? Local colleges and universities will of course cost less than international or the very top institutions so try and estimate how much money you’ll need to save. While things like bursaries and scholarships might make getting their place easier when the times comes, having as much money saved towards the potential costs as possible is never going to be a bad thing.
Creating Your Education Fund
To make sure your education savings stay separate from your regular spending, think about opening a special education savings account. There are different types, like the 529 plan or the Coverdell ESA. These accounts often have special benefits that can help you save more money in the long run.
Balancing Risk and Rewards
When it comes to investing it can be really tempting to go for the biggest profits you think you can get, but it’s important to find a balance as bigger profits are going to come with more risk. You don’t want to take too much risk and end up losing money you’ve saved. Diversifying your investments (spreading your money across different places) can help protect your savings from big ups and downs in the market. Using fee only financial advisors can be useful if you’re new to investing and don’t know much about the risk/ reward element as they can help you set goals and get on a plan thats right for you.
Keep Checking and Adjusting
Financial planning isn’t a one time thing- life changes, and that means so should your plan. Check in on your savings goals regularly and see how your investments are doing, and adjust things if you need to. This way you can stay in control and make sure you’re still on the right path.
Get Your Child Involved
Talking to your child about money and planning is never a waste of time, especially as they start getting older. Teach children the importance of goal setting and saving, encourage them to get into their own good saving habits or even save money themselves. Getting children engaged can be a terrific way to impart valuable lessons about responsibility and financial management.
(Cover Image Source: Pexels)