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In today's unpredictable financial environment, it is becoming more important for parents to openly discuss financial responsibility with their children, especially when it comes to paying for a college education. According to the College Board, the current average annual cost at a four-year private school runs nearly $27,000; the average annual tuition for public school is $10,600. Two or three kids in college at the same time can send your tuition fees skyrocketing.
However, planning ahead isn't rocket science. Parents and their children can take the first step in ensuring a financially responsible life for the entire family with these basic steps:
Plan for the Future-Today!
College could be far off or right around the corner-either way, there is much to prepare for between now and that first day of school. Free resources available online, such as Yahoo! Finance's College Savings Center (http://planning.yahoo.com/c/), help you develop a realistic plan and begin preparing for "the future" now. Access the easy-to-use online calculators, tools, and expert articles and advice from some of the best names in personal finance, such as Suze Orman, to determine how college budgeting fits into your overall financial goals.
Figure Out How Much You'll Need and Decide How to Save
Soaring tuition has made it necessary to estimate future costs five, ten, even eighteen years down the road. Use an online future cost calculator to do the guesswork for you; FinAid's College Cost Calculator (http://www.finaid.org/calculators/costprojector.phtml) is one option. If college is more than a few years away, investigate savings vehicles such as 529 college savings plans and Coverdell Education Savings Accounts. Frequently Asked Questions about 529 plans are answered at SavingForCollege.com (http://www.savingforcollege.com), and Yahoo! Finance's College Savings Center (http://planning.yahoo.com/c/faq.html).
Don't Let It Send You To The Poor House
According to personal finance expert Suze Orman, "Parents today struggle with financial security as they enter or approach retirement and paying for their child's education will not benefit their future situation at all. Not every family can afford to pay for their child's education and there is no shame in that. There are plenty of other ways that parents and their children can figure out ways to finance college through scholarships, loans and financial aid."
Orman advises parents to work with children to share in the planning and saving process. "This gives kids an incredible and longer lasting gift-responsible money management skills and parents who will be safe and secure in their retirement."
Orman's article, "Retirement or College Savings: Raising Financially Savvy Children These Days Isn't Kid's Play," is part of the Yahoo! Finance "Money Matters" series and is available exclusively on Yahoo! Finance (http://finance.yahoo.com.)
College Is An Investment
View college as an investment rather than an imposing cost. According to the College Board, the gap in lifetime earnings between those with a high school diploma and a B.A. or higher exceeds $1,000,000. Planning and saving early on will go a long way in ensuring a healthy financial future for the entire family.
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