If you’re a new parent or grandparent, it’s hard to image anything more important than caring for the day-to-day (and often minute-by-minute) needs of your new bundle of joy. But, to give your child the best start in life, it’s important to think a bit further down the road – their college education. So, between the feedings and diaper changes, we encourage you to take one sleep-deprived minute and read these three, great reasons to start saving for college early. With the rising cost of college and the importance of a degree, it could be one of the most important things you do for your baby.
Here are three great reasons to start saving early:
The cost of a college education in 18 years is projected to be much higher than today. According to the College Board’s Trends in College Pricing 2013, the average cost of a 4-year degree at a public college today is approximately $18,000 per year. For private colleges today, the cost is more than $40,000 per year. Eighteen years from now, the same education could cost nearly $250,000. To learn how much you need to save, explore Edvest’s college savings planner by plugging in colleges from across the country and estimating your monthly savings rate.
The earlier you start, the more your money has the opportunity to grow. Setting aside $50 a month in an Edvest college savings plan when your child is a newborn, for example, can accumulate to more than $25,000 by the time they head off to college. However, waiting until your child is 12 years old and set aside the same monthly amount, it will accumulate to just under $8,000. As this chart illustrates, the sooner you start, the sooner you can take advantage of the compounding effect of time on your investment. Set your goals and start saving today.
The longer your time horizon, the more opportunities and life events you can take advantage of. Between monthly savings, tax refunds, bonuses and inheritances, you can give yourself more opportunities to fund your account if you start an Edvest account early. Plus, the more time you have, the more you can take advantage of gifts to your child for birthdays, holidays, graduations, and more.
There are a few simple steps parents and grandparents can take to chip away at the cost:
Contribute on a regular schedule. Once you open an Edvest account, you can easily set up an automatic contribution plan or inquire with your employer about an available payroll deduction plan.
Develop a discipline of savings versus spending. There are lots of great resources for choosing a savings goal, developing a plan, creating a budget, and finding creative ways to save money. The website, www.americasaves.org is a great resource for getting started.
Friends and family can help, too. With Edvest’s e-Gifting feature, you can enlist the help of others to contribute to your child’s college education. With a few clicks, you can invite friends and family to securely contribute to an Edvest account online. There’s even a selection of gift certificates that can be downloaded and presented to the child. Plus, any Wisconsin resident who contributes to a relative’s account can take advantage of a Wisconsin state income tax reduction of up to $3,000 per child per year.
Remember, it’s never too early to start saving for college. With so many benefits to starting an Edvest college savings plan early, you shouldn’t wait a minute longer. Build a bright future for your baby and open an Edvest account today.