Investing Considerations
The cost of higher education is on the rise and it does not appear to be leveling off any time in the future. It is a good idea to start investing in your child’s post-secondary education as soon as possible. College tuition can be a nightmare for many middle income families. Middle income families often make too much money to get student loans and state grants but many of these same families cannot afford to pay for all of their child’s college tuition. Investing in your child’s education early on is a good way to insure that there will be some funds for the daunting college bills.
Even those of us who are from families that qualified for student loans often find ourselves in way over our heads in debt six months after we graduate. My parents never considered investing in my college education. I was one of five children and it was a struggle just to pay the bills. There was no money left over to invest. I easily qualified for student loans but I never thought that I would still be paying on them fourteen years later with no end to the payments in the near future.
I chose to start investing in my daughter’s education once I found out I was pregnant. I started an account with U Promise, a site that is affiliated with a number of retail and grocery stores as well as products. I assigned our credit cards to the account. I added our grocery discount cards to the account and I started to actively purchase products affiliated with U Promise. My daughter had a small college fund before she had a name. After she was born, I put the U Promise account in her name.
I also started a savings account as a way of investing in my daughter’s college tuition. This traditional method of investing gains a small return in interest, but it is safe and steady. I also plan to use the investing strategy to encourage my daughter to develop a work ethic. She will earn money from chores and add part of the money to her savings account.
I do favor using a savings account for investing over a program like U Promise. It is easy to make unnecessary purchases and it is easy to buy more expensive products just to get a few cents into your U Promise account. For example, I can buy Tide at my local discount store for about half the price that it is offered at my local grocery store. I have to choose between paying cash at the discount store with no credit on the education investment account and buying the product at the grocery store for credit.
I figure that Tide offers only one percent of the purchase to the account. If I spent twenty dollars on the product, I only am investing two cents. I can save between five and ten dollars on that same purchase by going to the discount store. I would rather put the extra funds directly into my daughter’s savings account. With a little thought and a lot of planning, I hope that my daughter has a worry-free college career.
