There’s no better time to think about the future than now, when your child’s still little. Every decision you make from this point on should lead towards saving money and securing for your child everything they need to make their college journey worthwhile. You may still have more than a decade to prepare for it, so it matters to consider these tips to start and build your child’s college fund.
1. Start Small and Simple
If you’re going to sum up the total cost of a four-year college education, it will leave you breathless! What’s more, you can expect the average amount to rise with inflation. Knowing where you are now, you might be worried if you and your spouse could ever make a decent living. Keep in mind that you still have mortgage repayments to make, plus daily expenses, on top of building an emergency fund. However, regardless of your financial situation, you could still consider it progress if you can set aside what little amount is left for your child’s college fund.
There’s no general rule for setting an amount to set aside each month. Always consider your current financial situation and start with loose change. It might not be much, but it should motivate you to put in more money as you earn more and as your child grows. In any case, starting early should be your priority, so begin with what little you can save and gradually increase the allocation. You would be surprised by the results as you enter the second month.
2. Focus on Building New Income Streams
In this economy, you can’t simply get by with a single income source, and you can’t expect things to get more affordable either. You and your spouse may already have high-paying jobs, but you can’t be too sure if you will have enough to save for your child’s future if you deduct all your dues and expenses.
Your best course of action would be to build another way of earning. This will help boost your child’s college savings and ensure you still have enough for essential expenses in case of major financial disruptions like a medical emergency.
Freelancing might be a good option if you don’t mind monetising your free time, but it might lead to burnout since you will be forced to juggle two jobs. You’re better off creating a passive income stream that lets you earn with less continuous effort.
If you’re a master of a certain craft, consider creating an online course that pays you per subscriber. An online shop might also be a good platform for earning passive income. Use Etsy or build a Shopify website where you can sell printable decorations and other items you made using Canva.
3. Set Up a Dedicated Savings Plan
If you want your child’s college fund to be even more inflation-proof, you can opt for a dedicated savings account, especially one that features a tax-advantaged investment component. In Canada, families can open up a Registered Educational Savings Plan which taps into government grants that match 20% of contributions made to the account. Any gains or interest earned by the account is tax-deferred, providing a higher withdrawal amount should beneficiaries be ready to enter college.
Whichever the case, it’s important to think ahead and research possible educational plans that match your needs, specifically your family’s earning capacity. You may want to consider a plan that puts your contributions into a diverse portfolio of high-yielding investments, such as mutual funds and real estate investment trusts. Be sure to get a rough estimation of the total cost of your child’s future college education and choose a plan that provides you with the best benefits.
4. Support Your Child’s Academic Journey
Your child can benefit a great deal from scholarships and grants that reward them for being exceptional in their chosen academic field. Along with financial preparation, you should also think about nurturing your child’s development and supporting them in whatever field they’re good in, whether it’s athletics or science.
Either way, they can qualify for scholarships that will help reduce your total expenses and redirect your savings to their college education fund. If you’re aiming for grants that are made available once your child transitions to college. Certain institutions offer highly competitive programs that shoulder thousands of pounds in tuition expenses. A case in point is the NHS Learning Support Fund which offers £5,000 per academic year for qualified students undergoing training as nurses, midwives, or allied medical professions.
There are many ways you can nurture your child’s gift, but chief among them is to simply be present. You don’t have to shower them with gifts and rewards. It’s also about providing them the opportunities to become better in their area. Have them undergo training and allow them to set their own goals. The worst you can do at this point is to focus more on getting them to qualify for scholarships than providing them the love they deserve. That’s something you will want to avoid.
5. Stick to a Strict Budget
This might sound cliche, but if your priority is to spare your child from having to carry a huge student loan debt and give them fewer things to worry about in their college journey, it’s important that you adopt wise money management habits early on. As you start building your family, begin with creating a monthly budget that includes long-term goals and expenses, including your child’s college education. List all of your debts next and determine how much you are able to net each month.
Your budget will only look good on paper until you get to develop the right habits. You may have to change your lifestyle significantly if you and your spouse’s combined income doesn’t leave much room for savings. It’s also important to have a contingency plan in case of major financial disruptions.
You could decide on selling items you don’t need or are hogging too much space at home or you can take out a loan from My Canada Payday so you don’t have to withdraw money from the fund. Whichever the case, building a good budgeting strategy from the get-go will put you on the right track.
Endnote
College is a long way off but you can’t deny the fact that your child will inevitably enter that chapter. It’s just a matter of knowing if you have enough resources to help make their transition to college life seamless.