Is Saving for College A Wise Choice?

As many new parents can attest, everyone else is always giving advice and they usually have their own personal take on raising children. Some of the advice might be useful, while some might make you rethink your choice in friends, but the fact remains true that there is always one piece of advice that parents will receive time and time again, save for college.

saving for collegeYes, the age old parental equalizer; asking other parents if they have started saving for college yet seems to be a rite of passage for those that have started saving. So my question is, “Have you?” If your answer is no, don’t feel bad; a lot of parents haven’t started saving for college or they have but just not as much as they have been told they should.

To many, a good college education is important and, although college can be expensive, saving for college should start early with many parents starting before their children are even born! I’m going to let you in on a little secret about college savings that you will want to know and that could end up saving you a lot of money over the long term.

For starters, don’t put too much money into a college fund for your child.

What?! How is that sound advice you ask? Bear with me for a minute and I will explain.

College Funds and Financial Aid

Having a large college fund can hurt your child’s chances of getting financial aid. Just as the lenders take into account your own personal income when deciding Junior’s funding, they also take into account how much money you have in a college fund. Financial aid is based on need, if you have a steady income and have worked hard for the past 18 years to save money for a college education for your child, you will often be given less aid than someone with equal income but less savings. A good tip to remember here is that schools and financial aid providers don’t factor in your retirement account savings so it is best to put the money there until it is needed for college expenses.

Work Builds Character

Young adults who take jobs during their college years build more character and the work experience is very beneficial for them later in life. They will usually get better grades and have more of a feeling of self-worth knowing that they provided for their own future. Working while attending class will teach them time management skills and they will do much better after graduation than a student who didn’t work during their college years. These are actual facts backed up by the US Department of Labor and they make a lot of sense for both parents and students alike.

Not Everybody Goes to College

It true, college isn’t right for everyone. Now, I am sure that I can expect many comments about this one, but there is great deal of good paying careers available today that don’t require a college education. Many college students are entering the workforce with no marketable skills other than those they received outside of the classroom. Skilled trades are in high demand and many of the skilled laborers end up with college degrees that have no bearing on their current employment. If you end up paying into a 529 Plan for your child’s college savings and they decide that college isn’t right for them, you would incur an enormous tax penalty when taking that money our and using it elsewhere.

For these reasons alone, it’s best not to jump right into a college savings plan and look to other alternatives where your money will work harder for you and give you the future opportunity to send your child to college when, and if, they decide to go.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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