Your child may be five years old, 10 years old, or 15 years old and it’s time to start planning for college. You may think you have no time to prepare or that there is plenty of time of prepare. You may feel the costs to send a kid to college are overwhelming or that the local community college is the cheapest route. The key is to get started no matter what the age of the student is. How you get started is the key. Let’s go over these items one by one:
- What do you expect college to cost? If your child is 5 years old you can estimate what college may cost by using one of the many college cost calculators that are available. If your child is 15 years old you will have a good idea of what college will cost since it’s only a few years away. The question is what will the net cost of college be? Will your child be going to a private school, public school, or a community college? What strengths does your child have and what are they passionate about?
- How will inflation impact your goal? If your child is 5 years old this will be a significant factor in how and where you save. If your child is 15 years old this factor will impact how far your savings will go.
- How much do you have set aside? If you are starting when your child is 5 years old you can use time to your advantage, beat inflation, and maximize your college options. If your child is 15 years old you can determine how much you have in college savings and if it is enough. If you need to supplement your savings, will it come from home equity, cash flow, loans, other assets, financial aid?
- How will you pay for college? Do you want your child to pay for a portion of college, fund it entirely, or will you pay for all of the costs? Will you use your money or other peoples money?
- What does your budget look like? With over 4,000,000 google searches per month this is one of the most commonly searched words. At the same time it is one of the least utilized tools. A good budget can give you an instant raise in pay.
Start the process by following three steps:
- Get Organized-Get your finances in order. Is there more month left when your money runs our or is there a surplus at the end of the month? The budget is the key tool to use. This will determine how you can allocate your available resources. One thing to remember is you can always borrow for college but not for retirement.
- Get Started-Don’t procrastinate! Whether you are in the savings mode or getting your child ready for college there is no time to waste. With a multitude of options out there it’s time to make choices.
- Monitor the Plan-If you are in the savings mode or paying mode there’s plenty to keep track of. Is your savings on track? Are college costs increasing at a higher rate than expected? How do you maintain your financial aid package?
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