Wednesday, February 15, 2012

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Getting Ready for Those College Costs

My children are still young and high school seems like years away. The day they go off to college, then, currently feels like a lifetime in the future. I simply can’t imagine having my children grown, out of the house, and no longer needing their mom on a daily basis.

But, as we all know, time moves quickly and our kids always grow up faster than we’d like. This means that we should certainly take advantage of every opportunity that we have to live in the moment, appreciate the time we have to spend with our children, and enjoy the process before it gets too late. It also means that it is never too early to start looking towards college on a financial level. College costs are incredibly expensive these days, and the price of tuition is high enough at most schools to put a considerable burden on all but the wealthiest of families.

On this note, my husband and I have decided to start saving and planning now. We don’t know what our children’s future hold, but we want to be prepared for any eventuality. Here’s what we’re planning to do:

Contribute Regularly to a College Fund  The best way to save for college is by regularly contributing money to a dedicated savings account, just as one would do when planning for retirement. We are going to open an account for each of our children and routinely set aside part of our paycheck for reinvestment in these accounts. If you do your research, you can probably find some investments that are specifically geared towards college savings and provide higher interest rates, such as a 529 plan. Any online student resource should be able to help you get started.

Allocate Our Assets With a Long-Term Focus  For the last few years, as careers have changed and children have been born, my husband and I have approached our financial lives with a more short and medium-term focus. When choosing a credit card, for example, we have looked for the best cash back credit card offers or have gone for the Chase Freedom card, which offers great monthly rebates. But now our financial plan has begun to take a much more long-term approach. Specifically, we want to minimize the assets that colleges will evaluate when determining financial aid. This means contributing more to retirement accounts and refinancing our mortgage so that we don’t own our home in 15 years.

Getting Our Children Involved  My husband and I hope to contribute significantly to our kids’ college costs, but that doesn’t mean we want to completely shoulder the burden alone. Instead, we want paying for college to be a full-family effort. To this end, we hope to raise our kids with a comprehension of the college situation and an expectation that they will help us out in the ways that they can. As they grow older, I hope that our children’s babysitting and summer jobs can contribute in part to our university savings fund. I don’t want to deprive them of all their earning, and I know that what they add to the fund won’t be much, but on principle I still believe that the expense of college should reflect a communal family effort.

These are the ways that my husband and I are beginning to plan for the eventual cost of our children’s college tuition. Although I certainly have no idea where my kids will be in 15 years, I hope that they are getting a good education and I pray that we are prepared to help them finance it.

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