5 Reasons We’ve Already Started Saving for College
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My girls are young, but like most parents, I’ve already started thinking about the day they’ll leave me to go to college.
And sometimes just thinking about it makes me panic. Not because I’ll be an empty nester but because, oh my gosh, college is expensive!
While I don’t have a crystal ball and I can’t predict the future, I am still planning for their future college attendance. Here’s why.
1. Kids Who Go to College Earn More
It’s common knowledge that people who earn college degrees tend to earn more than those who don’t. But I was startled to learn just how much more.
According to Higher Ed Dive, “Individuals with bachelor's degrees will earn $400,000 more in their lifetimes than those with just a high school diploma.”
The same report claims, “College graduates who enrolled at age 18 and earned a degree in four years ‘can expect to earn enough relative to a high school graduate’ by age 33 to make up for paying tuition and other costs and for being out of the workforce while in college.”
Of course, I will support my daughters even if they don’t go to college, but those numbers are a great motivator for saving for college.
2. Money Grows
College is a long way off for my two girls.
But that means it gives the money I put into their college savings accounts even more time to grow.
For instance, money in 529 plans grows tax-deferred until the day comes when you need to withdraw it to pay for education expenses.
Plus, with a 529 plan, family and friends can also contribute.
Sure, it may sound boring to give a financial gift to a 529 plan while the kids are young, but their future selves will thank you!
3. College Costs are Rising
College costs are rising at crazy rates.
Check out these statistics from U.S. News representing the rise in college costs over 20 years:
The average tuition and fees at private universities have jumped 144%.
Out-of-state tuition and fees at public universities have risen 171%.
In-state tuition and fees at public universities have increased 211%.
I don’t even want to think what college will cost when my girls are old enough to attend, but I know enough to know I need to start saving now.
4. Makes Saving a Habit
I learned early on to treat saving like a habit.
I like to set aside some of every paycheck for savings. What I like even more is setting up savings for automatic contributions, so I save without even thinking about it.
It can be really tempting to not save – especially for things like college that seem so far away.
Turn saving into a habit so you don’t give in to temptation.
5. Helps You Set Realistic Expectations
Lastly, saving for college early helps you set realistic expectations.
We all have different incomes and budgets. Only you know what you can and can’t afford.
By saving today for tomorrow, you’ll be better prepared to talk to your kids about how much you will be able to help them when the time comes.
