During a recent workshop with a group of women (all who had children), an array of financial topics were covered during the session, however, the biggest concern, next to retirement, was college planning. Some in the room felt overwhelmed because they didn’t know how they were going to be able to afford to send their child/children to the school of their choosing. The sad reality, most people will continue to rely on student loans, which continue to plague many people late into their working years and some even into retirement.
A post-secondary education can be extremely valuable, but many people amass huge amounts of debt just to obtain a college degree. Is it really worth it? Some are fortunate enough to have parents who got the “memo” about starting early. Please note, when it comes to saving/investing for any financial goal, time is the key component.
How exactly do you make college planning easy? There’s an old saying that it takes a village to raise a child and we have completely forgotten about that. If parents could remember that old saying, they wouldn’t fret so much about college planning. The ladies in that room mentioned that they just didn’t have the extra money to start a college plan. I shared a simple story (a true story) to put the women at ease. The story was about a young mother (my really good friend), who took it upon herself to put everyone on notice that the “village” was going to help fund her daughter’s college fund. She did it by way of a Christmas card. She laid it out plain as day in the letter that if people wanted to give Christmas gifts for her daughter, please send gifts of money or mail a check to fund her 529 college savings account. The account number and address was listed right there in the letter. My friend took it upon herself to coach/train the “village” to give gifts of money and not silly gifts she will outgrow or break. Side note, my friend’s daughter was 1 years old and clearly she understood that money (the compounding effect) grows the best over a long period of time.
As a parent, starting some type of account for college is all that you need to do. There are many vehicles that can be utilized to save for college, the most popular being the 529 savings plan and Coverdell educational savings accounts (ESA). Some even utilize their Roth IRA’s or life insurance. No matter which option you choose, make sure to consult with your financial planner/adviser to determine which vehicle(s) suit you best. Opening that account is usually the biggest hurdle, which you must overcome. Once an account has been established, keep reminding people that your child/children need money for school. This method sounds simple but it will be challenging if you allow your pride to get in the way. Swallow that pride and put the “village” on notice!