by: Joyce Dutton
College Payments
Paying for college is one of the largest expenses a parent will face in their lifetime, other than paying for a house. Because of this, care needs to be taken as well as special planning and allocations of finances in order to take the burden away from this expense. Starting early is the best option, even when your child is a toddler is not too soon. Consider the following timeline for saving for your childs college education.
When college is 15 years or more away, then you should open and education IRA that will allow you to save conservatively for your childs college. Also, since there is a lot of time before your child will need the money this is the time to invest in aggressive funds or stocks. As the time for college nears, you will want to save money in conservative ways, but now is ok to be aggressive if you wish.
When college is 10 15 years away for your child, then there are some additional things you can do. First, consider prepaid tuition plans that allow you to pay for college over a period of time before your child ever reaches the first day of school. The problem with this is you take the decision away from your child of which college they want to attend. Also, talk to your accountant about different savings plans your state offers for college savings. More than likely, there are some plans that will help you meet your savings needs or receive tax breaks. Also, make sure your portfolio is more secure and stabilized. Try to get your investments in order and start saving more conservatively.
When there are only five years until college, make sure your portfolio is stable and all investments are conservative. This is very important because the time til college is narrowing down and at this time you will want to have your savings stable and in tact.
When there are only five more years until your child enters college, make sure your investments are safe and secure and not in any aggressive funds. This is the time to guard the money rather than risk it on aggressive markets. If you realize that even though you have been saving for more than 15 years, you will not have enough money to pay for your childs tuition, you can consider different student loans that do not need to be paid back while the child is enrolled in school and that have low interest rates. There are loans available for the parent as well as the child, so whatever works for your family is the best option.
As you can see, when you start planning and saving early, the idea of paying for college is not nearly as frightening as waiting until the last minute.