College Savings: A Week by Week Plan
Choosing the right investment can be confusing. There is some great information available at Internet sites such as www.fidelity.com, www.smartmoney.com, or www.schwab.com. These sites can give you a good overview of the different types of investment options. Some investment brokers have mutual funds specifically set up for college investing, and the funds are managed based on your child’s age. The closer the child gets to college, the more conservative the investments.
Whatever you do, don’t throw up your hands and walk away from investing. When in doubt, open that savings account at the bank and start saving. You can certainly do that over the next two weeks. As you learn more about different investment options, you can move the money. At a minimum, answer the following:
- How comfortable are you with taking risks with your college savings?
- Which investment(s) do you understand and which will help you meet your goals within your time frame?
It may take you longer than two weeks to select an investment you understand and are comfortable with, but the message here is to get started. Keep in mind, the earlier you start, the better.
Take a look at the numbers.
You have done your homework and it’s time to see what all of this means. Below are examples of how saving and investing can really add up. Let’s assume you have not saved a dime for college to date but know you can save $25 per month (or $300 per year).
|13 Years Old||Eight Years Old||One Year Old|
Remember from week one: you may not want or need to pay for all college-related expenses. Many students work while in school, qualify for financial aid, or qualify for scholarships. Determine what you can start saving now and build on it as you go.
Take a look at www.upromise.com and/or www.babymint.com. These organizations allow you to add to your college savings by purchasing everyday services from their business partners. For example, you can associate purchases at a specific gas station chain (i.e. Gas Station A) with your account. So each time you buy gas from Gas Station A, a small percentage is contributed to your college savings. Go over the list and be sure you fully understand the terms of participation. You may find you already purchase services from their partners.
To summarize your plan of action: 1) set a reasonable deadline for action (four weeks), 2) take small, manageable steps and 3) start now (at the very least, open that savings account). You can do this by defining what college savings means to you, choosing an investment option you understand, and taking a look at the numbers. You may also want to check out other innovative ways for saving such as upromise.com and babymint.com. Keep in mind that you will also need to learn about financial aid and scholarships as college approaches. With planning, investigation and discipline, college savings can be as easy as one, two, three!
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