Saving for your child’s tuition can be a huge financial burden. According to the Education Data Initiative, the average cost of college in the United States is $38,270 per student per year, including books, supplies, and daily living expenses. It may seem daunting trying to save this large sum of money and may be financial suicide. Here we’ll discuss 7 reasons why saving for college may be wrecking your finances or isn’t necessary at all.
1. Your Child Doesn’t Go to College
Not every child will want to pursue a college degree. If you’ve spent years saving for their education, you may have sacrificed your financial health.
2. You Can’t Pay Your Bills
If you’re saving for college instead of paying for the essentials, you could be under a great deal of stress. You should always prioritize your daily needs before saving for the future. If you’re ignoring debt, accounts in collections can also impact your credit for years to come.
3. Your Child Could Qualify for Financial Aid
Depending on your financial situation, your child may qualify for financial aid. Along with that, they may get a merit or athletic scholarship. It’s hard to tell what the future may hold for your child. You may want to visit a financial advisor to see what your options may be to pay for college including student loan options.
4. You Don’t Have an Emergency Fund
You should have at least $1,000 in an emergency fund before you start worrying about saving for college tuition. Ideally, you should have 3-6 months of expenses saved in your emergency fund before you think about any other kind of savings. This way unexpected expenses won’t leave you scrambling to pay for things like rent or food. These of course are more immediate needs than saving.
5. You Have High-Interest Debt
If you haven’t paid off high-interest debt, it may be too early to save for college. Instead, use the debt snowball method to pay down the money you owe.
6. You Aren’t Saving for Retirement
Saving 15% of your income for retirement is ideal. Remember you’ll be relying on this money in your golden years, so it’s essential to put this first. Consider how much you’ll need to save for retirement and use retirement calculators to know just how much you’ll need to save.
7. You Don’t Have Any Other Investments
Some other types of investments can have a higher-yield than a 529 education fund. A Roth IRA can be withdrawn for education expenses and may have a higher yield. You may even want to invest in real estate or crypto which is a less traditional way to grow your money for college tuition, but may be beneficial to meet your long-term financial goals.
8. Your Listening to The Wrong Advice
Saving early may not be the best option for your financial situation. You still may be able to save for your child’s education, but you might not have to start as soon as they are born. There are many other financial steps you should take before focusing on saving for college. After all, your child can also help pay for their own education.
Are you saving for your child’s college tuition? What steps are you taking? Let us know in the comments.
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Teri Monroe started her career in communications working for local government and nonprofits. Today, she is a freelance finance and lifestyle writer and small business owner. In her spare time, she loves golfing with her husband, taking her dog Milo on long walks, and playing pickleball with friends.
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