The honest answer to how early you should start saving for college is — as soon as possible. College is expensive, and more and more students put themselves into debt over their education every year.
💡 The Frank Takeaways:
- What is tuition reimbursement?
- The Average Savings Account Balance is Around $25k
- Every Year Counts When it Comes to College Savings
The honest answer to how early you should start saving for college is — as soon as possible.College is expensive, and more and more students put themselves into debt over their education every year. The earlier parents start saving for their child’s education, the better. It could mean the differences in thousands of dollars, and interest accrual, for your child in the future.
Start Saving A.S.A.P.
Financial advisors that frequently set parents up with 529 savings accounts say that parents should start saving between 25 and 34 years old. ‘
According to a recent survey from Ascensus, the average age that parents open a 529 savings account is around 44 years old. That’s pretty astonishing, with the average age for first-time mothers is 26.3 years old. That leaves the average parent waiting until their oldest child is in their teens to begin saving.
Imaging starting when you have your first child? Even just $100 a month could garner you thousands towards an education later down the line.
Savings account balances
The same study suggests that the average median account balance is $25,292, while the average highest balance is $34,211.
According to EducationData.com, the average cost of college in the United States is $35,720 per student per year. That means that most parents don’t have enough in their savings account to cover a single year of college— let alone the entire cost.
Why start now?
If you haven’t already started a savings plan for your child, today is a great time to do it. Missing out on one more year is another tax-free option you have to invest money that could grow into additional college savings.
Parents that start a savings account as soon as they have a baby accumulate a third of their college savings goal by the time their child graduates high school.
Meanwhile, starting later could mean saving only 10% of your goal and putting the weight of student debt on you or your child’s shoulders.
When you start saving is entirely up to you and your individual needs. Many young adults having children have many other expenses and debts they need to pay off first — such as their college loans.
Between your bills and all those unexpected life expenses, it might seem like there’s never a suitable time. But even if you can only contribute a small amount each month, it’s better than waiting until your child is older and limiting what you can save before they head off to college.
Need more help when it comes to college savings? Contact us at Frank!