Saving up for college is a good idea, whether you’re going to UIC Online, a local community college or large university. Paying for your college education can be expensive and if you’re not financially prepared to handle the costs, you may end up dropping out. If you want to secure your financial future, learning good money habits is essential – this includes having a savings account. And it doesn’t just have to be the job of parents – high school students can also work and use the money earned to put towards their higher learning. But few actually do this. If you’re not convinced that you need to start saving up for college today, then here are some reasons that may change your mind.
1. Kids Only Become More Expensive
If your child is still in diapers, you know how financially draining it can be to take care of them. There’s expenses for pampers, wipes, baby formula, daycare, clothes and toys. Unfortunately, this is a bill that will last well over 18 years, especially if you’re planning to send your child off to college one day. However, there is a way to soften the blow once the time rolls around for them to continue their education, and that’s to start saving whatever you can today.
2. You’ll Inspire Others to Help You
When your loved ones see that you’re trying to save for your kids’ future education, they will more than likely lend a helping hand. Family and friends may send you checks and savings bonds to go into the college fund. You can also set up gifting features on certain savings account, which will allow you to send notifications to people via email or social media. This is a great gift idea for those who have a hard time finding presents for children. This is possibly the best gift they could give your child anyway!
3. It Will Give Your Savings a Chance to Grow
The longer you leave money in a savings account, the more interest it will accrue. You can open a 529 college savings plan, which is specifically designed for this purpose. All of the interest your account receives will be compounded. What this means is that it will earn interest on top of the interest you’re already getting. Plus, the money is tax-free when you withdraw it (as long as it’s spent on expenses for college).
4. It Gives You Time to Plan
You don’t know which college your child will go to one day, so it’s hard to say how much you’ll need to save. However, you can use a College Savings Planner to help you determine what you can conjure up based on the age of the child, the income of your household and the type of college you want your child to pursue.
5. Financial Hardships May Arise
Things happen – you could lose your job, face a pay cut or have your living expenses raised. During these times, you won’t be able to contribute as much to your child’s college fund. But if you started early on, you will have a nice sized chunk already in the savings, which will be accruing double the interest if it’s in a 529 plan.