So you’ve recently welcomed your first child into the family? Congratulations. This is surely an exciting time in the life of any parent. It is also a busy one, as you’re probably going to find your hands full with diapers, bottles, baby food, cribs, and playpens. You’ll be reading up on parenting books and sleeping lightly at night in anticipation for any cry from the monitor. In short, your life for a period will center itself around the needs of your infant child.
All the while, it’s important that the arrival of your child necessitates long-term needs as well. The cooing infant in the stroller may not seem like a college student right now, but he or she will surely grow up faster than you could ever imagine. Before you know it your child will be graduating high school. And, when that happens, you’re going to want to have some savings accrued to start tackling the substantial cost of college these days.
Fortunately, you have 18 years to save – so long as you start saving now. Here are the main steps you should take at this point:
Open a college savings account
Saving for college is similar to saving for retirement: both are expensive, long-term goals that require regular financial contributions in the present. The best way to do this is by opening an account dedicated to college savings. A 529 Plan will probably provide the greatest tax advantages here.
Don’t buy your home
When children are born, many people realize that they need more living space and upgrade to a new house. There’s nothing wrong with doing so, but you can reap considerable financial aid rewards in the future if you don’t fully own your home by the time your child goes off to college. Along these lines, you can benefit from taking out a long-term mortgage and figuring out when to refinance your home so that the mortgage is not paid off for a couple decades.
Ask for education contributions
A new child will often be showered with a multitude of new toys and gifts from friends and from members of your extended family. While it’s important that your infant has a good collection of toys, it is also important that they start getting financial contributions towards their future college cost. On this note, when people ask what they can get for your child in honor of his birth or in anticipation of a first birthday, tell them that you’d really appreciate a contribution to his college fund.
These are just a few of the ways you can start planning now for your child’s future college expense. While college may seem like multiple lifetimes away, you’ll be surprised how short 18 years feels once the moment arrives. And, when it does, you’ll want to insure that you’ve maximized your savings for the occasion.
This is a Guest Post written by Samantha Peters, who enjoys blogging about topics relating to saving money and financial planning for the future. Sam regularly contributes to Paid Twice personal finance blog. Sam lives in sunny San Diego, California where she lives with her dog Leona.