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I’m one of those parents who believe “something is better than nothing.” Although your child may be in high school and you think the “saving for college” boat has sailed, I’m here to tell you that you are wrong. It’s never too late to start saving for college, even when your child is in high school. Let me tell you the reasons why opening an educational savings plan account, right now, is a good idea.

Before I jump into the reasons why it is not too late to save money for college, I want to let you know that this post piggybacks off of another college savings post I wrote and received some criticism (mostly by email) and cheers. I still stand by what I said. So, if you want to know why I refuse to save a lot of money for my kids’ college fund, you can read that here.

Think about College Graduation

Right now, high school graduation is at the forefront of your mind. It will be here before you know it. But what about the additional 4 years that your child will be in college? It’s not over until it’s over which is college graduation. That means you still have time!

Many people think that they must have the ENTIRE 4-year tuition by the time the student STARTS college. NOPE. Just have something…anything will reduce your stress of not being able to pay for college. You still have 4 more years to figure it out if you have a senior in high school.

Don’t Forget About Compound Interest

Compound interest is when you earn money in addition to the amount of money you have deposited. The compound interest does not stop during the college years, it continues until all of the money is gone. So, your money has an additional time during the college years to grow…well the amount that you don’t touch.

Example: if the average rate of return (compound interest) is 6% for your educations savings plan account, that means:

• for every $100 you will earn $6 per year
• for every $1,000 you will earn $60 per year
• for every $10,000 you will earn $600 per year
• and so on…

Thanks to compound interest, you can still get the most bang for your buck by investing even if you think you are too late!

Tax Benefits

First let me mention this, as of November 2018, contributions to an educational savings account is NOT tax deductible at the federal level. Tax benefits vary state to state so it is best to check with your local accountant for the best tax benefits for you.

In the meantime in your educational savings account, your money is growing tax-free! That means that you do not have to pay taxes on the earned interest like you would with a regular investment account. When you make a withdrawal, as long as the money is being used for approved expenses, there are no additional taxes that will be taken out.

You are not alone. It is NOT too late to save for college unless your child has already graduated from college (LOL). Parent life gets busy. First, we are preparing for the arrival of the baby, then we are picking out daycares and schools, next are the endless extracurricular activities, and before we know it, we are thinking about high school graduation.  It’s not too late, start saving for college now just so you know…

Are you behind on your college savings goals?