If you have student debt, you know what a stress and burden it can be on life. Perhaps your motivation for savings for your kids’ college education is to help alleviate some of that stress, so they don’t have to go through what you did. Perhaps you want to enable them to go to the best school possible. Perhaps you want to have it all covered, so they don’t have to work while in school. There are lots of good reasons.
How do I know how much to save?
First, let’s get one thing straight here. You know on those airplane safety presentation, when they say “always secure your oxygen mask before helping others”? Same thing applies here. You will do your children NO favors by paying for their education at the expense of being able to take care of yourself later in life. So, yes, that means retirement savings ALWAYS come first. Now..the scary part about this comes down to one word: inflation. Not normal inflation, education inflation. It’s estimated that education costs have been rising at an average of 7-8% per YEAR. Now that doesn’t seem like a lot, but if your kids are young (or yet to be born!) that means that the cost of tuition is going to look drastically different than what you are familiar with. Deciding how much to save is a personal choice. Depending on what kind of school they attend (private, out of state, in state, or ivy) and how many years (maybe you want to help with med school) they will be attending, you could aim to save anywhere from nothing to 100% of the future costs. Fill out the calculators below, and we’ll run the math for you.
These numbers look impossible..
With inflation that high, yes, these numbers can be pretty rough. Again, something is always better than nothing. And never fear, teach your children to choose which school to attend wisely, take out loans VERY cautiously, and apply for all the grants and scholarships they possibly can. That, combined with your savings, combined with hard work and a little elbow grease, and things will work out. Anything you can save for your kids education is a gift they will be grateful for, especially when they are much older and you have saved them from years of debt. So, thanks Mom and Dad!
( CLICK TO DOWNLOAD – this calculator is on the fourth tab )
Disclaimer: All calculators are blank and intended for you to use on your own. All posts in the “Family Finance” series are general posts of an educational nature. None of this represents specific financial advice.