Things to do Before You Save For College

According to a recent article in the Huffington Post, some families should consider investing in other financial goals before beginning to saving up for college for the kiddos. The four priority financial goals suggested in the article are below:

Life Insurance

Purchasing life insurance may be the most important purchase a parent can make to protect a child’s long-term financial well-being. In the event the primary earner passes away, the insurance will replace his or her lost income and can cover higher educational costs if the policy is large enough.  

Credit Cards

Paying double-digit interest on a credit card while receiving single-digit returns on a college fund is not a sound proof saving plan. By paying down credit cards and limiting adult spending, parents can put themselves in a stronger position to save for college funds.

Emergency Fund

Parents should set aside a solid cash cushion to cover any unexpected costs that may arise in the future. The cash cushion should consist, at a minimum, of three to six months of living costs.

Budget

Parents will likely find more money to put toward a college fund if they create and stick to a realistic budget. Printing out bank and credit card statements and evaluating where cash is spent each month is a good first step.

See Jacoba Urist, Please, Don’t Save for College, The Huffington Post, Jan. 24, 2012.