Step 1: College Planning for a College Education
A college education is one of the most important ways you can contribute to your child's future success. At the same time, paying for that education can seem like an insurmountable task. Today, a four-year college education can cost anywhere from $25,000 to $104,000-and costs are steadily rising. Fifteen years from now those same four years may cost as much as $58,000 to $155,000.
While these costs are considerable, a disciplined savings plan can help prepare you for expenses that lie ahead. The key is to start now, using the basic facts and figures you'll find here.
This is critical to any savings program. When time is on your side, it only takes a reasonable monthly investment to accumulate an impressive sum by the time your child enrolls in college. For example, if you begin saving when your child is one year old, and invest $51 each month at a 10% annual compounded pretax rate of return, you will have set aside $25,000 for your child when college begins at age 18.
If you wait until your child's 13th birthday, however, you'll have to invest $341 each month to accumulate the same amount by the time your child turns 18. Table one gives you a quick idea of what you would need to invest monthly, assuming a 10% pretax rate of return compounded annually, to meet your financial target.
TABLE 1- Monthly Investments Can Build*
|No. of Years Until College
||Investment Goal $25,000
||Investment Goal $50,000
||Investment Goal $100,000