If you wish to achieve a financial planning goal, you need to start as early as possible. That’s because the more time you have to save for a goal, the more your investments grow due to the compounding of interest.
Calculating the likely cost of a child attending college can be a sobering experience, and this is because the cost of an education has been accelerating, and increases in tuition almost always seem to outpace general inflation. The sad truth is, in the future, many Americans will not be able to provide children with a full ride to college.
Peter, who has two children, ages six and four, wants to start saving for their future college costs. He was motivated to think about doing so by a workbook he read on planning for college costs. The accompanying worksheet told Peter that he needs to save $600 per month per child. That got Peter’s attention.
Instead of focusing on saving $600 per month for each child, Peter should consider starting with a much smaller figure that he can afford. Although a smaller monthly investment may not allow him to send the kids to an Ivy League school, the money will at least help with some of their costs. Whatever Peter is going to do, he should get started right now. He might currently be a little behind, and it would have been better if he had started college savings plans when his children were born, but the problem will only worsen if he doesn’t start immediately.
Like Peter, if you have children, you should start saving something now, no matter how small, or you may find you’ll never start.