Have you ever worked on a jigsaw puzzle?
Ever worked on a jigsaw puzzle that didn’t have a picture on the box? Can you imagine the difficulty putting it together? Where would you start?
Start on the borders
Because putting together the outside borders allows you to take the unknown picture and start to get a handle on the puzzle. You know that everything within the puzzle has to fit within the borders.
College planning is very much like putting together a puzzle without the box cover art. There are so many unknowns that affect the final puzzle that getting started can seem overwhelming.
With the new year just starting, here are three New Year’s resolutions you should keep. Starting the new year with these resolutions will allow you to take the unknown puzzle pieces in college planning and make the process more manageable.
The first resolution to set for the new year is to determine how much college you can afford to pay. With college costs covering the range from community college to elite college prices, you can’t afford to not set a budget.
Some questions to ask yourself are:
- Will you pay for ½ the college costs at an elite college but all the college costs at a public 4-year college?
- Is it important for your child to contribute to their college costs by getting scholarships or taking out student loans?
- Do you have other children you also have to educate?
- Are you willing to push off your own retirement to pay for your child’s college expenses?
Once you’ve answered these questions for yourself, the next thing to do is to communicate the budget. Make sure each parent agrees to the budget and then tell your child. It’s much easier to have this conversation when emotions are not invested in a particular college you can’t afford.
What happens when you don’t communicate
A friend had always done well in school. She was in the process of applying to colleges when her parent’s told her they hadn’t saved anything for college. It left a bitter taste in her mouth that still lingered 25+ years later. A difficult but honest conversation with my friend during high school would have set her expectations. It also would have avoided finding out in her senior year that she could not afford to go straight into a 4-year college unless she got significant help from the college.
Savings = options
The second resolution to keep this new year is to start or increase your college savings. Use the start of a new year as a signal to increase the amount that you have going into college savings.
More money saved for college means more options. With more money saved, you can choose between colleges rather than accepting the college that is the least expensive. With more money saved, you can decide to take out less in student loan debt. With more money saved you can afford to have you child go to Spain for a study abroad program.
Like in retirement, no one wishes they started savings later or saved less for college. You always wish you had gotten started sooner and saved more.
Cancel the NFL Red Zone package
Finally, the third resolution to keep is reduce your expenses. Many people resolve to be better managers of their money in the new year. Taking a fresh look at your expenses can be a good place to start.
Can you bring lunch one day a week? Over a year, at $5.00 a week, that would save you $250.00. Can you make coffee at home rather than stopping at Starbuck’s every day? That simple decision might save you $832.50 over a years time.
Can you cut out the NFL Red Zone package from your cable bill? That’s what a friend asked her husband when faced with the need to cut their expenses.
We all have some expenses that can be cut out and redeployed into savings.
In summary, the three resolutions to keep are:
1. Set a budget for college and communicate it.
2. Start or increase your college savings
3. Reduce your expenses
On the next business day, make a commitment to call your college savings provider and increase your college savings. Ask them if you can automate it in the future so you are putting away more each year.
Keeping these three resolutions will ensure that 2015 gets off to the right start.