 |
By Kelvin Mkwawa, Seasoned Banker.
|
As a parent myself, I believe one of the best things I can do for my kids is to send them to college as I understand the benefit of a university education not only in terms of personal growth but also in career opportunities and financial stability. In addition, a college degree remains a major achievement in the modern economy yet many parents aren’t preparing for it – just below 40% of parents Worldwide are actively saving for their child’s education according to several studies.
In this article, I will share the tips on how to create a college fund for your kids. It is true that some parents want their kids to attend a specific college based on prestige or family tradition ties but for the majority of parents, it is impossible to know what kind of school your kid(s) will attend. Therefore, it is crucial to start saving early, even if it is only a small amount – the sooner you start saving, the more money you will have for your child’s education.
There are so many different choices when it comes to savings plans for education: college fund plans, stock market investment accounts, Government securities (Treasury bills, and Treasury Bonds) and savings accounts. Unfortunately, in our banking industry, currently, we don’t have any college funds accounts that are specific for saving for your child’s education (this topic is for another day). Saving early will not help unless you have a clear strategy to achieve your college fund goal.
With so many different choices out there, it is easy to be overwhelmed but the most important is to look at the pros and cons of each savings plan to ensure the path towards your target is on course. Ideally, it is advised that the best time to start saving for your child’s education is when your child is born but some are going the extra mile by starting saving for their children before they are born. With compound interest and regular deposits made every month at least, the funds will have an opportunity to grow over a period of time hence helps you to meet other financial obligations.
Most parents prefer to save for their child’s education with some type of transactional account, such as savings accounts like Normal saving accounts and Fixed Deposit accounts. These accounts have been seen as one of the safest and effective ways of savings for education since the risk of losing the saved money is minimal. The simplest way to start saving is to make it easier for yourself by setting up automatic deposits into an “education” savings account.
There are so many different choices when it comes to savings plans for education: college fund plans, stock market investment accounts, Government securities (Treasury bills, and Treasury Bonds) and savings accounts. Unfortunately, in our banking industry, currently, we don’t have any college funds accounts that are specific for saving for your child’s education (this topic is for another day). Saving early will not help unless you have a clear strategy to achieve your college fund goal.
With so many different choices out there, it is easy to be overwhelmed but the most important is to look at the pros and cons of each savings plan to ensure the path towards your target is on course. Ideally, it is advised that the best time to start saving for your child’s education is when your child is born but some are going the extra mile by starting saving for their children before they are born. With compound interest and regular deposits made every month at least, the funds will have an opportunity to grow over a period of time hence helps you to meet other financial obligations.
Most parents prefer to save for their child’s education with some type of transactional account, such as savings accounts like Normal saving accounts and Fixed Deposit accounts. These accounts have been seen as one of the safest and effective ways of savings for education since the risk of losing the saved money is minimal. The simplest way to start saving is to make it easier for yourself by setting up automatic deposits into an “education” savings account.
The other option to save for your child’s education is through an investment account: this option gives you total control of your assets as well as lets you invest in a wide array of securities. You can set up an individual or joint account with a brokerage firm and invest in mutual funds or individual stocks of your choice but this option is very risky. Brokerage accounts usually invest in high-riskinvestments which can be volatile henceforth there is a great chance of losing the funds.
In conclusion, you don’t have to sacrifice your own abundance to provide a college education for your children. Remember, the younger your child is, the more expensive college is likely going to be going forward so it is vital to have a plan in place to achieve the goal of sending your child to college. No matter what plan you choose, starting to save for your children’s education is very important and a big investment you can make towards their future.
Written by Kelvin Mkwawa, MBA
Seasoned Banker
Email address: Kelvin.e.mkwawa@gmail.com
In conclusion, you don’t have to sacrifice your own abundance to provide a college education for your children. Remember, the younger your child is, the more expensive college is likely going to be going forward so it is vital to have a plan in place to achieve the goal of sending your child to college. No matter what plan you choose, starting to save for your children’s education is very important and a big investment you can make towards their future.
Written by Kelvin Mkwawa, MBA
Seasoned Banker
Email address: Kelvin.e.mkwawa@gmail.com
No comments:
Post a Comment