Paying for all or part of your child’s education can be one of the best gifts you can give. That doesn’t mean that every parent should start saving for college immediately, if at all. Here are some good reasons to wait on saving for college for your child:
You Don’t Have an Emergency Fund Saved Up
It can be tempting to start saving for college the minute your first baby is born, but it can be a disaster if you don’t have some money saved for your family already. Emergencies come up, especially with a new baby. You don’t want to be tempted to put expenses on credit cards because you’re caught unprepared. Make sure to have at least six month’s worth of expenses saved up before you start your child’s college fund.
You Have Consumer or Student Debt
It’s hard to wait on saving for college if you have credit card debt, car loans, and / or student debt to pay off. I recommend taking care of these debts first before saving for college, as the interest payments can be a real dent in your family’s budget. While it’s true that it’s better to save early all things considered, you will save more if you take care of your own debt before contributing to a college savings account.
You Aren’t on Your Way with Retirement Savings
Some people feel like college savings for children should come before retirement, but this is not a wise way to manage your finances. You will be likely to need your retirement savings no matter what happens. Your children may not need college savings due to scholarships, alternative education, or different life plans. I also believe it is better for a parent to pay for retirement and no college than to be dependent on your children later in life. You don’t have to have your retirement fully funded before saving for college, but you should be more than on track for your age group.
You Haven’t Purchased a Home Yet
A home is an investment in your family’s future, and if you haven’t saved up for a down payment yet, it should come before college savings. Make sure you have enough for a house big enough for your family, as well as enough money for the mortgage payments. It will be easier to save for college once your housing is taken care of in a stable and permanent way.
You or Your Spouse Have Education Needs
If you or your spouse need to go back to school, this should come ahead of your child’s education. Saving for you child’s college while paying for your own education is too much to take on at once. In this case, I’m only talking about degrees that increase your earning power and job prospects. Fund your own degree, start earning more money, and then begin saving for your child’s education.
Your Child Really, Really Doesn’t Want to Go to College
Most children will say that they don’t want to go to college at one point or another, but there are occasionally children who really aren’t temperamentally suited for college. If your older child has other career plans and really doesn’t want to go to college, I think it’s best to stop saving for college. Your child can always go to college as an older adult, and you can help out then if you’re able. I believe it’s better to let your child choose about college than to fund someone who just ends up dropping out or failing. Some people aren’t suited for college until later in life, if at all.
You Want to Teach Your Child How to Save and Earn
Do you feel like your child needs to earn a college education? Some parents and children do better if the child has a hand in saving for college. If this is the case for your family, delay saving for college until you have a system worked out with your child. Maybe you will match everything your child earns or only pay for two years at a community college. Get creative and do what works for your family.
You Don’t Believe in College
If you don’t think college is a good value, then it doesn’t make sense to save for it. While it may sound crazy to not want to pay for your child’s college, more parents are realizing that their kids don’t get much out of their six figure investment. Some alternatives to paying for college can include helping your child learn online, starting a family business together, or investing in your child’s start up. College is only one path in life, and the cost is not always worth it.