This post is brought to you by FutureAdvisor. All opinions are our own.
As a parent you know from the day your child is born that you need to plan for their future. That includes planning for their college education. College is such an important part of your kids’ future, and we know all too well what student loans can do to your finances. In 2014, the average college graduate owed $33,000 in student loans, triple the average of 20 years ago. Imagine how that number will grow by the time our children reach college age?
After going through undergraduate school and then graduate school, my student loans became more than my own home mortgage. With such a large amount owed each month just for my education, it became a burden that put our family into debt in other areas. Planning for your child’s future is important from the moment they are born for this reason. You don’t want them to have the same struggles we have had.
How To Plan For Your Child’s Financial Future
Start saving early. As soon as your baby is born, or even before they are born – you should open a customized tax-advantaged account to begin saving money for their future. This helps your money grow faster than a standard savings account. Check out the graph to see just how much of a difference it makes.
This account can be set up easily to automatically take money out of your paycheck each week, or an auto draft from your bank account on a monthly basis. If you think you can’t really afford to put money aside, you are wrong. If all you put aside is $5 a week for 18 years to a FutureAdvisor tax-advantaged account, you’ll have a projected $10,000 to put towards their college education!
Use a Financial Advisor for ultimate savings. Just saving money isn’t enough. Unless you have a lot of excess funds to put aside, your $5 per week investment is not going to pay for their entire education. You can however, take that $5 per week plus other random amounts as they grow up and use a financial advisor like FutureAdvisor to help make sure you’re growing that money as much as possible WITHOUT losing money in the process in fees.
FutureAdvisor’s “Diplomas without Debt” product helps you put your money to use in the right ways in special tax-advantaged college savings accounts. It’s 100% free and takes care of all the complicated parts of setting up the right account. Since they open all of the accounts for you, there is no guesswork about what account type is best for your needs. No complications or frustrations. Just sign up and decide how much you want to contribute. They’ll handle the rest. The result is larger savings, safer savings and easier to access savings when colleges come calling.
Encourage them to contribute as they earn money. Don’t forget to teach your kids about financial responsibility. One of the biggest problems I faced as an adult was the fact that my parents hadn’t shown me a good financial life. Not only did they live paycheck to paycheck, they tended to be in deep debt more often than not. It was a real struggle when I had no savings but had to take out loans for my own college education.
Start your kids early and work with them on understanding how to be responsible with their own money. That means encouraging them to put money aside for college and contribute to their tax-advantaged investment account. It also includes not spending more than they can afford to spend.
Securing a plan for your child’s financial future is all about beginning early and working diligently. No matter how little you are able to put aside each week, you can make a difference in what their future will be like. Even if you are only ever able to put aside that $5 per week I mentioned above, you have still done something positive toward their future and college education.
How do you plan for your child’s financial future? Do you have any other tips or tricks to build their college fund? Share in the comments.