Save Something

TAKE THE SEVEN-FIGURE sum now needed to send a child to college for four years—and we’re talking here about in-state universities, not just private colleges. For most parents, saving up that sum simply isn’t doable, especially because they also need to save for their own retirement. In fact, retirement should take precedence: Your kids can take out loans to pay for college and there’s a chance they may receive financial aid. By contrast, for retirement, you’ll need to start out with a heap of cash.

What to do? Save what you can. When it comes time to pay those college bills, you’ll be grateful for any cash you have set aside. Where will the rest of the money come from? If you’re like most parents, you’ll muddle through, paying college costs out of current income, perhaps getting some help from the grandparents, asking your children to get a part-time job and take on loans, and also borrowing money yourself. Fingers crossed, your kids will also receive some grants and scholarship money.

If you put aside at least some savings, it may allow your children to graduate without crippling amounts of student debt that could create heaps of financial stress and limit their career choices. But that still leaves two questions: How should you invest your children’s college savings—and what sort of account should you use?

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