Saving for College: It’s Never Too Early to Start (A Beginner’s Guide)
When you are buying diapers and paying for daycare, college feels like a lifetime away. It is easy to say, "I'll start saving when they are in high school." But the math tells a scary story: By the time your newborn is 18, a four-year degree could cost over $200,000. If you wait until they are 15 to start saving, you will need to put away thousands of dollars a month to catch up. The secret isn't to be rich; the secret is Compound Interest . Here is why starting with just $50 a month right now is better than saving $500 a month later. 1. The "Time" Advantage Compound interest is when your interest earns more interest. It needs time to work its magic. Scenario A: You invest $100 a month starting when your baby is born. By age 18 (assuming a 7% return), you will have roughly $40,000 . Scenario B: You wait until they are 10 years old. To get that same $40,000, you would have to save nearly $350 a month . The Lesson: Start small, but start today . Even $2...