As we know, saving for college is important to ensure your child has a good education without being burdened with student loans.
But what most people don’t realize is that saving for college isn’t just about putting away money every day, it’s also about how much you’re willing to spend when you do save.
Many students feel pressured into buying expensive snacks or drinks at school fundraisers, but very little money is actually spent because they didn’t want anything more than an apple or an energy bar.
By avoiding these temptations, you’ll be donating more to your kid’s educational fund. Also, staying in budget can help you hone your saving skills as you learn where your funds are going!
This article will talk more about why investing is important for parents and some easy ways to start investing.
Reasons to save for a rainy day
As we know, saving for college can be tricky at times.
It’s hard to keep up with all of the expenses that stem from attending school. Tuition and fees, room and board, books and other needs like clothing and transportation add up quickly!
Fortunately, investing in your future is something most people are inclined to do anyway. By setting aside money every week or every month, you’ll find it easy to accumulate savings.
And these days, everyone seems to have an excuse as to why they don’t have enough saved up.
With the cost of living rising due to inflation and student debt continuing to climb, it makes sense to start budgeting now.
But beyond just having fun by spending time doing things, savings make life more comfortable. Being able to draw a pay check each month means you’re not dependent on another person for food, shelter, and safety.
Do not put your savings in a financial institution
In fact, if you have to close an account, it is better to choose to spend money instead of saving it because there are plenty of ways to earn spending money!
This way, you will be more motivated to save since you’ll need to find other ways to fulfill your desire to spend money.
Furthermore, most banks ask you to agree to place certain limitations on how much you can withdraw per month or week. This creates stress as you try to meet your goal of savings while also trying to maintain normal daily life activities.
It may even make it difficult to stay within budget due to the restrictions. These pressures often cause people to give up and avoid putting away their money.
Making large monthly payments every few months makes sense when saved properly, but doing so comes with its own set of problems that we mentioned earlier.
Pay yourself first
One important way to save money for college is to put saving ahead of spending. This can be done in several ways, such as putting away what you would normally spend for food each day into an account that you have access to online or through your phone, which helps you keep track of how much money you have.
You can also make it a rule to only purchase things if you have saved enough money for the item. This creates additional pressure to save, since you want to buy the item, but you do not feel like you have enough savings!
Another way to do this is to reduce how many items you need to purchase. For example, instead of buying one book per student, get a free ebook from somewhere so that no one has extra material they need. Or try getting some of your classmates’ books at half price to share resources more evenly.
Spend to save
One important way to invest in your future is through education, and one of the most expensive ways to do this is by investing in college tuition. While it may seem like a large investment at first glance, there are many strategies and apps that can help you manage your educational expenses.
Many people begin saving for college later in life because they think they don’t have enough money to start investing. But with things such as payroll deductions and monthly savings programs, even individuals with very modest incomes can be able to contribute to a student fund.
By setting up recurring payments now, you will ensure that you continue to put away money into your child’s education long after high school graduation.
There are several different ways to add to your student fund, too. You can choose to pay more per year or less each month, depending on your budget.
Spend to improve your credit
Recent college graduates often spend heavily, investing in flashy new gadgets or expensive trips that they hope will boost their income later on.
But this can be a costly mistake if you don’t have money saved away for education.
Because while it is good to enjoy yourself now, you’ll need to eat before you study!
You’ll also want to pay off all of your debts so you’ve got access to money, otherwise you won’t be able to afford tuition. And spending lots of money in early adulthood doesn’t usually set people up for success.
Saving money right after school is an excellent way to prepare for the future. Even if you’re not planning on going back to university, keeping up with savings will help ensure you stay well-fed and debt free.
Consider a 529 plan
Recent developments in education have made it increasingly difficult to pay for college, even for students who are only a few years away from graduation. With tuition rising at an unprecedented rate, investing early can help mitigate the cost of attending school!
There are many great reasons to start saving for college now, not the least of which is educational savings. Many schools offer scholarships and fee-sharing agreements with other universities or professional organizations, so investing ahead of time can reward you by reducing your overall costs.
Another good reason to invest now is potential tax benefits. By putting money away during childhood and young adulthood, you may qualify to get some significant deductions. And if you contribute to a qualified retirement account like a IRA or HSA, you can potentially reduce your taxable income.
Still more incentive to save comes through taking advantage of annual contribution limits that depend on your personal situation. The average student spends around $20,000 per year including tuition, fees, room and board, and transportation. If you’re already spending well above this amount, consider whether waiting to maximize these incentives makes sense.
Keep track of your spending
It is very important to keep tabs on how much money you are putting into education-related expenses. This includes tuition, fees, books, and anything related to studying!
There can be some sneaky ways that students spend money. For example, many students purchase meal plans at school which include food. Many people also buy study guides and textbooks used during classes.
It is helpful to know what areas of spending contribute to most in college costs. By cutting back on these items, you will see savings in student services fees, transportation costs, and reduced textbook purchases.
Saving money does not mean you cannot enjoy things like meal plans or tutoring, but make sure they do not cost too much.
Consider taking out a loan
While it may seem like a hassle to put away money now for your future, doing so is worth it! Most college students don’t realize how much debt they will incur once school comes around again.
Most universities offer several scholarships and grants that can be applied towards tuition costs. It is not uncommon to find free or very cheap schooling through these sources.
Some even pay living expenses such as room and board! Finding resources and information about scholarship opportunities and ways to pay for school can be tricky at first, but does not need to take too long. You would save yourself a lot of money in the long run by looking before you leap.
Furthermore, understanding the average cost of attending college per year makes it clear why saving up now is important.