Small Savings Equals Big Dreams for Children
Written by: Carrie Kubacki, Interim family Living Educator, Langlade County UW-Extension
April is Financial Capability Month, and with the end of another school year rapidly approaching, it is a good idea to review how to save for our children’s future. Many families recognize the importance of continuing education past high school in today’s world—whether it be in apprenticeship training, one or two year technical college degrees or four-year college degrees and above. However, many uncertainties and worries exist for families about how to pay for post-secondary education with the rising costs of college. How can parents and other adult caregivers demonstrate the value of higher education and still feel financially secure?
Research has shown that children who have money set aside just for college know that someone believes in them, so they are more likely to work harder and do better in school. In fact, compared to children with no college savings, children with just $1-$499 in savings are three times more likely to attend college and are four times more likely to graduate from college (Assets and Education Initiative, 2013). Even if families are only setting aside a small amount of money each month, this still sends a powerful message to youth about the importance of higher education and their future.
Some options for college savings include the following:
- A savings account through a bank or credit union (americasaves.org),
- S. Savings Bonds the U.S. government (www.treasurydirect.gov or www.irs.gov)
- Coverdell Education Savings Account (ESA) which is an investment account (irs.gov/taxtopics/tc310.html or www.coverdell.phtml)
- Wisconsin in 529 (Edvest or Tomorrow’s Scholar) which is an investment account (edvest.com or https://529plans.investments.voya.com)
Even with a college savings plan started early, most families will need to consider multiple sources of funding in order meet the financial needs of their children. Scholarships and grants, parent and student income and savings and parent and student loans are all options for college funding. Planning for your child’s future may seem overwhelming or may seem like something we can wait to do until tomorrow. However, the reality is that the earlier a financial plan is in place for funding college, the less stress and more options a child will have. Consider speaking with teachers, school counselors, college admissions specialists and financial advisors for more ideas.