No doubt, parenting is a great adventure with lots of precious moments along the way. But there are also some challenges. While sleepless nights might seem tough, the real struggle for many parents is coming up with a viable financial plan to save for college.
And if there is more than one child? What about the retirement account — does it mean that parents have to ditch it altogether? Financial planning in general and saving for college, in particular, can get tricky. So here are four tips to help parents stay sane and ensure happy future for their children and themselves.
Start Saving Early On
Yes, parents can catch a couple of weird glances if they mention college savings for their seven-months old baby. But it is official: the earlier one starts, the better the result. Why? Meet the compound interest, a little something lots of Americans do not know about.
Basically, compound interest is a more profitable version of simple interest as it grows at a faster rate. This concept is pretty hard to grasp. But there are plenty of calculators on the web which can help parents estimate how much money they can save.
But here is a trick. It is wise to start early as possible, so your interest will have plenty of time… well, to compound. For example, Mark Kantrowitz, an expert on student financial aid, started saving the money before his children were born.
Still, parents should not tear their hair out if they have not started saving early. It is still possible to store a significant amount of money — the key here is to begin.
To make this process easier, it is wise to automate savings. Firstly parents have to come up with the amount of money they would like to store each month. Then they need to set up a separate college account (or accounts if there are more than one kid). Finally, one can set up the checking account to automatically transfer money.
In this way, college accounts will grow consistently. And parents will not have to worry about the monthly repositioning of money and juggling with multiple accounts.
Find a Part-Time Job
A part-time job is a great way to save more money. It is especially convenient for young stay-at-home moms who still want to add to the family budget. Here are three great options to explore:
Freelance writing is perfect for mothers who want to contribute to the family budget without leaving the house. You will never believe how many students turn to write my essay for me online services for assistance! The most important part here is to find a reliable resource. In such a way, it will be easier to find clients and ensure a steady income.
Part-time tutoring is an excellent choice for stay-at-home mothers as well. It is easy to start with and does not require any expensive resources. All that is needed is a computer, a pair of headphones and a stable Internet connection.
Also, with part-time tutoring, mothers can set up their own working hours and create personalized schedules. This is a perfect option for women who have a busy life.
Freelance Graphic Designer
This option is great for women who previously worked in the field of graphic design. With relevant experience and a portfolio, it is possible to freelance and create visuals for different companies. There are lots of websites that offer jobs to choose from, so everybody can find a perfect option.
Do Not Forget about Retirement
Usually, there are two major things people want to save for: child’s college and their own retirement. It can be challenging even to understand where to start, but it is crucial to think about both aims and find the balance.
But let’s start with something that may sound counterintuitive and hands-on crazy. To ensure a happy future for kids, parents should worry about their retirement first.
Sounds like crazy talk? Just bear with us here.
There are lots of options that can help young people get through college, starting with loans and ending with various scholarships and grants. However, there is no such thing as a happy retirement grant. If so, financial expert Joel Johnson strongly recommends all parents to start saving for retirement first and make sure they are financially secure.
After all, it is much easier to help the children with their student loans than trying to comprise a decent retirement account late in life. If you do not know where to start with the retirement account — the rule of thumb is saving 10% of the income.
Try Different Strategies
All families are unique — and so are their budgets, the amount of money that can be saved, and even the number of children. If so, there is no point in trying to precisely copy the strategy which worked perfectly for a renowned financial guru or even for a close friend.
The main goal is to develop one’s own saving strategy that will take into consideration all the unique features of every family. So, where to start? There are multiple investment strategies to try — for example, dollar-cost averaging, income tax advantages, state income tax deduction. There is also an option to apply for financial aid.
Still, it is vital to explore whatever strategy the family might find useful and appropriate. If there is an opportunity to discuss it with the financial advisor — even better. A professional will help with making sense of a myriad of options and choosing the best one.
Saving for college may seem intimidating as there are so many things to take care of: choosing a right saving strategy, picking up a part-time job, prioritizing some investments over the others… But proper high-quality education is a valuable asset that can help children succeed in life and use their potential to the fullest.
If so, it is essential to start saving and do it most efficiently. Luckily, there are lots of tips and hints which can make the process easier and more effective. The key is to simply start and be consistent.