Be Prepared Now, So That Your Child Can Go To College!
Investing in your children’s future is a timeless expression of love and care. The earlier that you start, the more robust the foundation is for your child’s well-being and success.
As we discussed early in my post about retiring early, the “magic” of compounding allows money to grow exponentially over time. By starting early, the potential for compound interest to work in your favors maximized. By the time your child reaches important life changes such as college or homeownership, they will be financially prepared!
- According to a study by Vanguard, starting to invest for a child’s education early can result in a much larger college savings fund, compared to delaying contributions.
How To Prepare For Those Five-Figure Costs…
i) Education Savings Accounts (ESAs) & 529 Plans
Consider opening a tax-advantaged Education Savings Account (ESA) or a 529 Plan. These accounts allow you to invest funds earmarked for education and withdrawals for qualified educational expenses are tax-free.
ii) Regular Contributions To Investment Accounts
Set up regular contributions to investment accounts on behalf of your children, and choose diversified investment options to optimize growth potential over the long term.
iii) Life Insurance With Cash Value
Find the right life insurance policies that accumulate cash value over time and ones that align with your goals. These policies can serve as a financial resource for your children’s future needs, offering both protection and savings.
Do Not Wait When It Comes To College Tuition!
Because college expenses are usually a financial burden, creating a dedicated college fund early on provides your children with the proper financial means. Your child will have a chance to pursue higher education without accumulating excessive student loan debt.
Take a look at the Head Start program, if you have young child starting his our her education.
Preparing Now Can Help With Down Payments
Research by the Federal Reserve Bank of St. Louis suggests that early financial assistance, such as help with a down payment, positively alleviates homeownership costs for younger generations.
Early financial planning provides you and your child assistance for down payments or co-signing for a mortgage. This is a head start in building home equity!
Questions, Comments, Concerns?
Even if it seems super far away, you’ll be happy that you started early.
This takes away any financial stress that you’ll feel, when your child does eventually start applying for universities.
So, get preparing now! Thank me later!
