When you first welcome a baby into your life, you become wrapped up in your love for them. There are so many firsts, exciting, and special moments; the last thing on your mind is their distant future. New parents often try to get through each day and week, rolling with the new phases. But did you know that this is one of the best times to consider their future seriously and start a college fund?
Starting a college fund as early as possible means they may not have to worry about student loans, and you won’t be scrambling to come up with tuition at the last moment. Let’s look at some of the best ways to start investing in your child’s future and create a college fund that grows.
Don’t Worry About How Much/Little You Can Save
New parents have a lot on their minds and many expenses to worry about. A common complaint is that they have little to save for their child. Don’t worry, as the amount you put away shouldn’t act as a barrier. The idea is that the money grows over time, so even if you can only afford to put away small amounts, it will grow by the time you graduate high school. Keep the long game in mind.
Find Ways to Make Smart Investments
While a savings account can be a fabulous starting block, you may also want to look into various investments. These can yield bigger returns than a traditional savings account so that you will grow the fund faster. Saving for the future means diversifying your portfolio and looking into things like compound interest and how it will positively affect the initial investment.
Look at the Budget and Find Areas to Cut Back
Convinced you don’t have enough extra money to put away for your child each month? This can be a great opportunity to create a budget, look at it closely, and find areas where you can make cuts. Budgeting is something that anyone can benefit from as it can shed light on areas that you may be over-spending and under-spending/saving on.
Some of the best places to make cuts in the budget include:
Even modest cuts to these categories may give you enough money to start a college savings account.
Look for Ways to Make a Supplemental Income
If you’ve created a budget and still can’t find a way to save money, it could be worth looking into ways to make a supplemental income. This will be income you haven’t factored into the budget. Therefore, it’s not needed for regular expenses. Instead, you can take all that money and invest it in college savings.
For some parents, this may be the easier way to save, as it doesn’t require any cuts or financial sacrifices.
Ask Grandparents to Skip Gifts and Make Investments Instead
Finally, you can get grandparents and family members involved in the college savings by skipping gifts and contributing to the savings fund instead. Just imagine 18 years’ worth of birthdays, Christmas, graduation, and other gifts in cash savings instead. It will have a huge impact.
Saving for your child’s education should be seen as a journey that happens over many years and may go through phases of minimal investments and then more sizeable ones. All of this will help make their education journey much more affordable.