One of the main costs all parents should bear is educational costs. For many families, saving money for a child’s education is a must. Providing that child with the opportunity to learn and grow is just part of taking care of your family. Yet, knowing how much money it is going to cost to do this can be a challenge. In most situations, families should begin putting money aside for college or university costs as soon as possible. This gives you more time to save and more time for interest to build on those funds.
Where You Are Matters
It is important to consider where your child is likely to go to school/higher education. Of course, if your child is just starting to walk, you probably have no idea what type of school he or she is likely to get into. Many of today’s higher education students are expats, traveling overseas for educational needs. Nevertheless, where you live or where the child will go to school is a big factor in terms of costs. Consider these worldwide estimates on the very basic cost of education only.
National averages range significantly. You can find your own national average and use that as a starting point for determining how much money you need to put aside for your child’s education. The key is to realize that this is just for one year, and it is an average. That is, some schools charge significantly more than this amount and will probably increase by 3-5 times if you are not resident in the country of education at that time. You’ll also need to consider between 3 and 7 years of higher education in most cases.
What Else to Consider
The average costs mentioned previously just consider the tuition for enrollment into the school. If the child will attend a college/university setting and live on campus, which is the most common option for students, those numbers jump significantly with room and board often costing far more than education. In some cases, saving for 20,000-25,000 GBP or more per year makes sense, especially if the student will be attending a well-respected school.
Considering this, how should you put money aside for your child’s education? Investing at a young age is one of the best ways to pay for your child’s education. You can use most types of investment accounts to tuck away a small amount each month starting as soon as your child is born. This makes it easier to save the large amounts you’ll need to pay for your child’s education.
Get Started with Savings
Determining how much to save is important, but starting to save is even more vital. That’s why it is so important for individuals to begin early. With compounding interest, it is easier to invest over the long term. You’ll put in less overall to the account because interest will build, adding value to the college plan as it goes.
When you think about all of these factors, remember that college costs continue to grow, often at a rate significantly higher than inflation. You’ll need to factor that into your plan for savings as well.
Work closely with your financial adviser who can provide you with very specific options that fit your needs. Everyone’s needs are different, but most people who begin to save early will be able to give their child at least some funds to pay for higher education costs, including tuition and room and board.
Blog originally posted by Mike Coady.