While it may seem as though your child attending college is still many years away, you may want to start thinking about how college will be paid for quite early—as early as when your child is still in diapers! With the total cost of college increasing at twice the rate of inflation, it is crucial that you start saving early. By starting your college savings well ahead of time, you can prevent putting yourself and your child in mountains of student debt down the line. But with the cost of college ever growing, it can be quite difficult to know how much you should really be saving each month. With the help of a CPA in Sacramento, CA, you can determine how much you should be saving, as well as how much you can actually afford to be putting away on a month-to-month basis. Here are a few crucial factors to consider when determining how much you should be saving for the cost of your child’s college education.
The first step to determining how much you will need to save is how much the college education might cost. One major factor contributing to cost is whether you are planning for your child to attend a private or public college. The current average annual cost of tuition, fees, room and board and other assorted costs (such as books) at a private college is approximately $46,272. If the cost of college continues to increase by 4 percent annually, this means that the price of college for someone born this year could wind up being about $400,000. If you are leaning toward a public university, the cost drops exponentially. Four years at a public university may come out to approximately $201,386 once your young child reaches college age. While these numbers may seem crazy, you should always plan for the worst.
What are you willing to pay for? Many families decide not to pay for every aspect of a college education. For example, you may opt to only pay for the tuition and books, leaving your child responsible for room and board. Determine what you are planning to pay for, and calculate the amount you need to save based on that number, as opposed to the entire price tag.
Get some help from a CPA in Sacramento, CA The best way to determine how much you should be saving for your child to attend college is to discuss the matter with a CPA in Sacramento, CA. A skilled CPA will be able to examine your current finances and projected growth in order to determine how much you can realistically afford to put away on a monthly basis for your child’s college education. By consulting a CPA in Sacramento, CA, you can take the guessing game out of saving and feel confident in that amount. Even if your financial situation may change over the next 18 years, a CPA can help you make the necessary adjustments based on your current financial status. Call Yoder & Co., CPA today to learn more about how we can help you plan for your child’s college education.