Saving for Your Child’s Education Means Starting Early

*This post is brought to you by the University of Southern California*

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An education may be one of the most valuable things you can give to your child and these days, it could be one of the most expensive. Today’s college graduates enter their first year of the real world owing a significant amount of money, in some cases, tens of thousands. It can be discouraging starting a new chapter in life with that amount of debt, but at the same time, it is important that all avenues are open to your child when it comes to getting the education he or she deserves.

That is why saving for college should begin early, even the day the child is born. If your child wants to earn a bachelors, a USC LLM or eventually a master’s degree, you can ensure that he or she has the money available. The advantage of starting early to save for a child’s education is that you don’t need to put huge sums in the account but can make small consistent contributions.

 It is easy to see how one can build up a large amount of money over the course of eighteen years. Simply putting aside and saving money seems like an excellent plan for holding onto it, but looking for resources and investment opportunities is the best way to make the money you put aside to grow.

Savings Accounts for Kids

You shouldn’t stash the money you are putting aside for college underneath a mattress—and few people do that nowadays. Many banks have special accounts that make it easier to save for a child. The youngster may be able to see that there is money that will be theirs someday for college, but they are unable to withdraw money and spend it prematurely. These savings accounts have a small but decent percentage of interest which can help the funds grow in value. Having a bank account for your child is also a way of teaching them financial discipline and the value of saving money.

Investments for College

The aim of saving money is, of course, not to lose it, and that is why a savings account is a popular way to put aside funds for college. However, there are other investments that offer a significant amount of security. Purchasing ten-year bonds when the child is around seven years of age is a way to keep the money where it is without any chance of losing it. Bonds are among the safest investments possible and, unlike savings accounts, can increase the regular amount of money invested.

Stocks and commodities seem like riskier investment options than bonds, but with that risk comes a certain amount of reward. There is an anxiety about the stock market because of huge fluctuations of stock prices. In spite of greater vulnerability, stocks remain one of the most popular investment vehicles out there. It is possible to invest in stocks with only a small amount of money. With some research and a course, it is not too difficult to become well-versed in the market in a short period of time.

To avoid having the investments you make for your child’s education disappear, you should view the money you put into stocks for education as a supplement to the regular bank account or bonds. You should only put money in stocks if you are prepared to lose it.

Don’t let your child feel that his or her limits dictate their possibilities. If your child is accepted to a fine school, or to pursue a USC MPA, you want them to accept it immediately. Unfortunately, for many, this means beginning real life with debts, but if parents and other family members save money, the child will have enough money at the age of eighteen to make educational decisions that may involve a dream school. Lay the foundations under these dreams early by beginning saving for college when your future college grad is just a baby. 

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