Parents Start Saving for College?

A resident of Nebraska, Kirby Spencer McDonald is the founder and president of Illuminate Financial Group. Kirby McDonald offers wealth accumulation, life insurance, retirement, and education planning advice to his clients at the financial advisory firm.

According to a college savings study done by Fidelity Investments, a leading financial services firm, 42 percent of parents regret starting a college fund late for their child. The study found that, on average, parents start a college fund when their child is six and a half years old, which most financial advisors consider late.

According to the advisors', parents should start a college fund when their child is born because the monthly payments made and interest earned could be a third or more of the college fees by the time their child goes to college.

For example, if at birth a parent puts $50 a month in a 529 college savings plan, they’ll have about $21,000 saved by the time their child is 18 years. Currently, a four-year degree at an in-state university costs on average $36,556 according to the College Board. With $21,000 saved, this parent will have more than half of what is required to take their child through college at current rates.