By Robert Stitt
According to Black Enterprise, 50 percent of parents with minor children do not have savings set aside for their children’s college fund. Those who do have money put away are saving less than those in the past. The survey “How America Saves for College” found that in 2015 about 10 percent of total savings is allocated for college. This was a three-year low and only amounts to just over $10,000 for a family actively saving.
While less money may be set aside, college tuition is actually rising. A few ways that you can combat the discrepancy between lower savings and higher tuition rates includes:
- Hire a financial advisor. It is hard to know what to do if finances are not your forte. The good news is that there are people out there that do this sort of thing for a living. A financial advisor will be able to help you set reasonable goals that will get you to where you need to be.
- Use an online calculator. There are some specific formulas that are used when planning for the future. In today’s high-tech world, many of these formulas can be used just by entering your numbers into the correct calculator. Many mutual fund companies have excellent planning calculators. A few others that may be of use include “Choosetosave.org and The Ballpark E$timate online calculator from the Employee Benefit Research Institute.”
- Put your money in a 529 college saving plan. The 529 is a tax-sheltered plan so the money you set aside can reduce your tax liability, and the money made through investments will not incur taxes as long as it is used for college.
- Use an automatic deduction. When you don’t have to think about the savings, the chances of actually saving goes up. Whether you are sending the money to a separate bank account or a 529 plan, making the payments automatic will help you meet your college savings goals.
You may not be able to set aside all that you want in these tough economic times. Yet, with a plan and some help, you will be a lot further along next year than you were today.