Planning for a child’s future can be a critical part of a family’s financial strategy, but the process can be difficult. Many individuals are looking to improve this aspect of their savings this year, which can help them be better prepared for what comes down the line.
Approximately 85 percent of parents noted that saving for their child’s college education is one of their biggest concerns in 2014, according to a report from Fidelity Investments. More than one-third noted that this is the most important aspect of their savings strategy this year.
“For many parents, saving for college is an area of focus throughout the year, but the New Year is an ideal time for families to reassess their finances, set new savings goals and priorities, and establish a college savings plan,” said Keith Bernhardt, vice president of college planning at Fidelity. “While many resolutions are quickly abandoned because they aren’t as specific and attainable as they could be, we are encouraged that families are setting concrete college savings goals, and developing actionable plans that will help them keep these resolutions.”
Nearly 90 percent of those polled explained they will try and save as much money this year as they did last year, the report showed. A total of 60 percent said they would increase the savings level this year.
Financial strategies for saving money for college are popular, as well. The report noted that 58 percent have one of these systems in place to keep track of the money built up. Parents have an average $405 saved each month in order to create a solid level of funds for their child’s education.
Many parents may begin college savings early on
Having enough money in the bank to properly give a child a college education can be difficult, which is why many parents may be looking to start conserving money when their kids are very young.
More than four-fifths of adults noted that college savings should start once the child is born, according to a report from the National Financial Educators.
Beginning savings at other times was much less popular. The report explained that 6 percent felt that they should start saving money once their child reaches grade school, while 1 percent noted that this needs to begin when they get to middle school. The same amount felt that high school was the right time.
Just 4 percent said that their child should not depend on them to save money for college, while 6 percent were not sure, the report added.
Students deal with higher debt levels
Debt is commonplace for many students who already graduated college, and the levels can be quite difficult to overcome.
The average student loan debt held by graduates in 2012 was $29,400, according to a report from The Institute for College Access and Success. More than 70 percent of those who graduated school in 2012 had some type of debt from their education.
“Despite discouraging headlines, a college degree remains the best route to finding a job in this tight market,” aid president Lauren Asher, president of TICAS “But students and families need to know that debt levels can vary widely from college to college.”
Both public and nonprofit establishments had a significant level of debt for their students. The report showed that the average for these graduates was $27,850, which is slightly lower than the national average due to private institutions not being considered.
When looking at state figures, those who left college with a degree in 2012 averaged as low as $18,000 to as high as $33,650.