Financial Planning for Kids' Education
Let’s talk about financial planning for your kids’ education in my “A Mom’s Guide to Financial Freedom.” series. Having two kids currently in tertiary education I know how important this is and wish we had prepared a little better.
Why Financial Planning for Kids’ Education is Important: A college education is a significant expense, and the cost continues to rise. By starting to save and invest early, you can help ensure that your children have the financial resources they need to pursue higher education without taking on excessive student loan debt. I would like to add that taking out a student loan should really be the last resort, it can be crippling for your child to start their adult life with debt.
Tips for Financial Planning for Kids’ Education:
Start Early: The earlier you start saving for your kids’ education, the more time your money will have to grow. There are a lot of different options available when it comes to saving or your child’s education. If you have a financial planner, chat to them about options or do a simple google search. Alternatively you can start your own saving, either as a simple savings account or in the form of an investment.
Set Realistic Goals: Research the cost of tuition, fees, and other expenses at the colleges your children are interested in attending. Use this information to set realistic savings goals. Consider factors such as inflation and expected investment returns when setting these goals. This exercise might shock you – I know I was shocked but it does definitely help when it comes to planning.
Automate Your Savings: Set up automatic transfers from your checking account to your kids’ education savings account to make saving easier and more consistent. This can help you stay on track with your savings goals and avoid the temptation to spend the money elsewhere. If possible create an account that is linked to your daily account, keep it separate so that you are not tempted to dip into it. Out of sight, out of mind and all that.
Encourage Contributions: Encourage family members to contribute to your kids’ education savings instead of giving traditional gifts. If grandparents, uncles and aunts all contribute to your education fund when it is your child’s birthday, it will help to grow the savings.
Explore Financial Aid Options: Research scholarships, grants, and other forms of financial aid that your children may be eligible for to help reduce the cost of their education. We also went through this exercise. It is time consuming and little disheartening but worth it if you get some sort of assistance.
Planning for your kids’ education can be daunting, but with careful planning and early saving, you can help ensure that they have the financial resources they need to pursue their educational goals. Start saving early, set realistic goals, automate your savings, encourage contributions, and explore financial aid options to help make your kids’ educational dreams a reality.
