The cost of college is as expensive as ever and is likely not decreasing anytime soon. That means setting aside enough money should be an integral part of every parent’s college planning efforts if they have chosen to help their children with tuition and other expenses. But despite their best intentions, some parents still make mistakes that end up costing them.
Here are some common college planning mistakes to avoid:
- Starting Late- Saving money for your child’s college fund early on will be most beneficial. Waiting until they are older means you will have to put large amounts of money aside each month instead of smaller amounts over a longer period. It will be harder to save up enough money that way, so save yourself the trouble and get a head start when they’re young.
- Underestimating Inflation- College tuition increases significantly each year, so it’s important to take that into account when it comes to college planning. Choosing the right savings accounts and implementing other strategies to fight inflation will help keep you on track.
- Not Claiming Tax Deductions or Credits- There are a lot of educational tax breaks that can save you money, such as the American opportunity tax credit or the lifetime learning credit. Don’t overlook them.
- Taking Money Out of Retirement Savings- While you can take out loans for college, the same can’t be said for retirement. Don’t sacrifice your own retirement savings when there are other options that can help your children pay for college.
Contact Planning Bucket to get connected with a financial advisor who can help with your college planning.