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Financing College
When to Start By Felicia Hodges
You knew that adding a member to your family wasn't going to "come cheap." With the cost of diapers, formula, breast pumps and clothing, taking care of Junior's basic needs can put a strain on almost any family's budget. You want to start squirreling away at least a little something for future college costs, but how does the average family juggle saving for higher education with a mortgage, life insurance premiums, retirement planning and car payments?
"Every family should try to save for their children's education. Unfortunately, not every family has that opportunity," says Brian Cronkright, a college financial planner and member of the National Association of Financial Aid Administrators. "Making a decision on what to save for retirement or your child's education is a personal choice that must be made by each individual family."
"The balancing act is a tough one, and many couples struggle to find a way to make it work," says Jennifer Ridley Hanson, director of financial planning for Financial Finesse, an agency that educates women on how to better invest and save money. "Sending your children to college is an important goal for most couples, but so is retirement." She suggests that families, especially those with limited resources, try balancing their savings between all of their financial goals. "Kids can work their way through college, but Mom and Dad can't work their way through retirement when they are 80 and 90 years old," she says.
Kirk Fine, a financial advisor with Waddell & Reed Financial Services, says it's important that families recognize their financial priorities and set savings goals accordingly. "I usually recommend that risk management issues life, health, disability insurance take top priority. Without an income, nothing would be possible. You can always get a loan for college if worse came to worst, but you will not be able to take a loan for retirement." He suggests that if retirement planning is on target by the time your little one is ready to matriculate, some of the funds being used for retirement can then be diverted to college savings.