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Start Planning for College Costs When the Baby Arrives

0 Comments 25 October 2011

In today’s world a college education is often the key to financial and professional success. Children grow quickly. It seems as though one day they are toddlers playing carelessly in the back yard, while the next day they are high school seniors submitting applications to colleges. It’s always painful to see a child rejected for admission by a college, but it’s even more devastating to have a child accepted only to find that the cost of their education is unaffordable.

Financing a good college education, even at a State school, can be one of a family’s most expensive undertakings. Good financial planning can minimize the chances of such a disappointment. It’s never too soon to begin planning and saving for your child’s education.

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What are the Cost Options?

The range of tuition costs varies greatly. State supported colleges and universities offer tuition as low as $3500 each year; some private colleges offer tuitions hovering around $10,000 per year; and many Ivy League institutions require tuitions of around $50,000 per year. It’s important that you decide, early on, what your expectations are. What will you be able to reasonably afford when your child reaches college age?

 Start Planning for College Costs When the Baby Arrives


Of course, when a child is just entering kindergarten, no parent knows what his or her career goals are. Parents must prepare for the cost of a four-year college program at a school that is affordable. Sure, there’s always the possibility of an athletic scholarship or a big lottery win, but don’t let that be your Plan A. Do your research. Find out the current cost of several schools that you may consider sending your child to. Project reasonable cost increases into the future. Factor in the benefits of available student loans and grants, and set up a savings budget that will meet the minimum calculated goal. This will be your savings baseline. Naturally, you can add more if your financial situation improves, and the child can also contribute regularly as he or she gets older.

The Best Way to Save

After you have determined the amount of money that you believe your child will need to pay for his college education, you’ll need to find the safest way to save money that will ensure the best possible return. There are a number of options, some being traditional savings and investment products, and some being designed especially for building an educational nest egg for your child.

 Start Planning for College Costs When the Baby Arrives


Traditional Savings Plans

There’s nothing wrong with opening a simple savings account for the child, and making regular deposits. These deposits can be reinforced by contributions from the child with a portion of the earnings from summer jobs, as well as from gifts from friends and relatives. The only problem with this plan is that the money is readily available for other non-educational uses. If you do not have exemplary financial self control, you may want to consider other options.

United States Savings Bonds

This is an often overlooked method for saving money for any purpose. Savings bonds are an excellent store of value, and can be purchased with a co-owner, making it difficult to misuse the funds without the agreement of the other co-owner. This offers an excellent traditional method for saving for educations. When friends and family are aware of the plan, they’ll find that bonds make excellent Christmas and birthday gifts.

Stocks and Mutual Funds

The return on these types of investments may be greater than the traditional methods of saving, but they do carry an element of risk. If this is your only vehicle for saving, it might be wise to consider other options to ensure that a minimum of funds are available when college time arrives.

529 Accounts

These plans, which are available in all states, allow money to be saved in a manner similar to that of a 401K retirement fund. Different plans offer different benefits. You can enter a plan from any state and use the money to pay for college in any other state. The tax benefits are significant, but there are penalties if the funds are withdrawn for non-educational purposes.

Do Your Research

There are many other options in addition to those mentioned above. Research them thoroughly before you make such an important long term decision. It may be wise to seek the assistance of a certified financial advisor. Once you find the plan that suits your needs, stick with it. The financial rewards at college time will be a relief for you and a definite plus for your college student.

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Amy Brown, a stay-at-home mom, gave up her own career to take care of her two babies and her husband. Now she is an editor of, a site offering baby gear reviews and tips on problems parents encounter in daily life. She’s surely willing to share her own experience and tips. Please visit Livesnet and read her recent reviews on Britax Roundabout Convertible Car Seat and the First Years Wave Stroller.

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