Every parent wants the best for their child. Their education is no different. While beginning the journey to save for your children's future college education is an important step, here are a few mistakes to watch out for along the way:
- Never Starting to Save—One huge, easily avoidable mistake parents make when it comes to their children's college education is that they never start to save at all. Sometimes parents may not save thinking that it is unnecessary and other times the fear of having to save such a large amount deters the parents from starting to save in the first place... Make sure to begin saving no matter how early or late. Even the smallest amount saved can help in the big picture.
- Not Saving Consistently—Another common mistake that parents make when saving for their kids' college education is that they don't save consistently. Even the smallest amount adds up over time. Try to set up automatic transfers from a personal account to a savings account to make saving consistently easier.
- Depending Completely on Scholarships or Grants—Oftentimes, parents will choose not to begin saving for their child's college education because they believe that their child will eventually get a scholarship or grant. The issue is that sometimes life does not happen quite the way we plan and your child may not receive a scholarship or grant. Even if the child does get a scholarship or grant, sometimes these do not cover the entire cost of college.
- Not Realizing All of the Different Options—Sometimes parents will think that their only saving option for their children's college education is a regular bank account. While adding money to a bank account is definitely one way to save, there are also other options... You can look into opening a savings account, get your bank to set up automatic transfers to an account, save any loose change you may have, investments portfolios and there are even education savings accounts, as well.
- Using an Existing 401k—Of course, as parents you want to do everything you possibly can to help your children out; however, one mistake to be wary of is that parents will sometimes use their 401k to fund their children's college education. The issue with using your 401k is that most parents will fail to continue adding to their 401k afterward. Not only is not having funds saved for retirement harmful to you, but for your kids, as well. Typically, it will be your children caring for you in your older age. If you do not have a retirement saved up, this may ultimately put a financial strain on your children as they care for you in the coming years.
- Choosing Not to Look into Student Loans—Another mistake that some parents make is that they choose not to look into student loans. They may feel embarrassed to be in need of a loan for their children's education, however with college costs increasing tremendously this may be a good thing to look into.