Saving for college is a significant financial issue for most families. With the ever-rising cost of inflation and the erosion in the value of money, parents of a four-year old may need to save at least $200,000 to fund the education of one child.
However, this should not be a cause for dismay for parents who begin to plan, calculate, and save. Moreover, parents may use lines of credit, scholarships and financial aid to help with the cost of higher education.
There are certain basic principles which are useful in planning to save for college. It may seem like a daunting task at first, but experience indicates that following certain steps make it easier.
Some of the major steps are:
- You should plan and budget for the probable amount you will need for your higher education for your child or your grandchild; or sometimes even for yourself or your spouse.
- You should have a flexible attitude.
- You should understand the relative advantages of various forms of savings, and take advantage of tax-free savings as far as possible and practicable -- the tax saved should be added to your savings for college.
- You should be careful to ensure you have the right mix of assets; your financial assets should be readily convertible into cash when you require them.
- You should be able to take all possible benefits under the 529 Plan of your state.
- You should be able to enlist the support of someone experienced in financial matters, a close friend or confidant, or a professional consultant. This will give you an advantage in the long run, and you won't make mistakes while deploying your savings and converting them into cash as and when required.