Getting A Head Start On College Savings
As your child’s high school graduation nears, and the conversation turns to higher education, the thought of funding it can be daunting. With a projected average private college education cost of $175,596 in Oregon, it may be difficult to imagine how one can afford it.1 Seventeen years from now, with a projected 5% annual increase, the cost could be more than $400,000.
Before you get too anxious, consider a few strategies to help you prepare for the cost of higher education.
Firstly, take advantage of time. The time value of money is the concept that the money in your pocket today is worth more than the same amount will be worth tomorrow. For example, if you save $100 a month toward your child’s college education, after 17 years, you would have saved $20,400. But that same $100 a month would be worth over $32,000 if it had generated a hypothetical 5% annual rate of return.2 The bottom line is: the earlier you start, the more time you give your money the potential to grow.
Secondly, don’t panic. Every parent can relate to the feeling – one minute you’re holding a little miracle in your arms, 17 years later, you’re trying to figure out how to pay for college. Saving for college may seem impossible, but remember, many people get some sort of help from financial aid and scholarships. Although it’s difficult to forecast how much help your student may get, these tools can provide a valuable supplement to your savings.
Finally, weigh your choices. There are several federally and state-sponsored, tax-advantaged college savings programs available such as a 529 college savings plan.
As parents, we want the best education for our children. By investing wisely, you can help tackle the financial obstacles of funding their higher education and smooth the way for them to pursue their dreams.
- www.collegetuitioncompare.com, 2022
- The rate of return on investments will vary over time, particularly for longer-term investments. Investments that offer the potential for higher returns also carry a higher degree of risk. Actual results will fluctuate. Past performance does not guarantee future results.
Information in this material is for general information only and not intended as investment, tax or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
Email me your questions at financial.freedom@lpl.com or call 541-574-6464. You can also post you question on our Facebook page: https://www.facebook.com/FinancialFreedomWealthManagementGroup
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