5 Common Mistakes Parents Make When Saving For Their Child’s College

 

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Learn what to avoid and how to build a smarter savings plan that sets your child up for success.

As parents, we want nothing more than to give our children every opportunity in life—especially when it comes to their future. Whether that means helping with college tuition, supporting their first big move, or simply giving them a financial cushion, saving for your child’s future is a major priority for many families. But even with the best intentions, it’s easy to make mistakes along the way. From starting too late to choosing the wrong type of account, some of these missteps can seriously impact your savings potential—and your child’s opportunities. The good news? With a little planning and a clearer understanding of what not to do, you can avoid these pitfalls and set your child up for long-term success.

Mistake #1: Waiting Too Long To Start Saving

One of the most common—and costly—mistakes parents make is delaying their savings journey. When your child is first born, it might feel like college is a lifetime away. Diapers, daycare, and doctor’s appointments take priority, and understandably so. But time is your most powerful asset when it comes to saving for your child’s future. 

The earlier you start, the more you can benefit from compound interest, which allows your money to grow not just on the original amount you’ve saved but also on the interest your money earns over time. Even modest, consistent contributions made early can grow into a much larger sum by the time your child is ready to head off for college, start a business, buy a home, or pursue whatever dreams they may have. 

Mistake #2: Prioritizing College Savings Over Retirement

It’s incredibly common for parents to put their kids first—especially when it comes to something as important as education. But when it comes to long-term financial planning, there’s a delicate balance to strike.

One of the biggest mistakes parents make is prioritizing college savings over their own retirement. It may feel like the right thing to do at the moment, but it can create major financial strain later on—for both you and your child. Here’s the thing: There are no loans for retirement. 

While your child can access a wide range of funding options to pay for college—scholarships, grants, work-study programs, and student loans—you won’t have those same resources available to you when it’s time to retire. If you drain your savings or stop contributing to your 401(k) or IRA to cover tuition, you may end up relying on your child for financial support in the future. That’s not the legacy most parents want to leave behind. 

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Top 15 Tips for Building Your Family's Savings Quickly

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Saving for your family's future can seem daunting, but with a little organization and some creative thinking, it's possible to bulk up your savings quickly. Don't be discouraged if you're starting from scratch - even small steps will add up over time. 

Young families sometimes run into money troubles by struggling to balance the family finances, often resulting in them exploring debt solutions and credit counselling. However, make sure to check out the below tips to ensure you can keep your finances on track and save for your family's future. 

Here are the 15 tips to help you get started. 

1. Make budgeting a family affair. 

There's no need to keep your budget a secret from your partner or kids. In fact, involving your family in budgeting can help everyone understand the importance of saving and be more mindful of spending. Get everyone on board by sitting down together to discuss your financial goals and how you can work together to reach them. 

2. Set savings goals. 

Saving money can seem daunting, but it's a lot easier when you have a specific goal in mind. Whether you're aiming to save for a down payment on a house, a family vacation or your child's education, setting a goal will help you stay focused and motivated. 

3. Automate your savings. 

One of the best ways to make sure you're saving money is to have it transferred automatically from your checking account to your savings account. This way, you'll never even see the money and will be less tempted to spend it. 

4. Cut back on unnecessary expenses. 

A great way to save money is to cut back on unnecessary expenses. Take a close look at your budget and see where you can trim the fat. For example, if you're spending $100 a month on cable TV, see if you can downgrade to a cheaper package or switch to streaming services like Netflix. 

Eat Out to Help Out - Find out who is Offering 50% Discount in August 2020

Orangery Tea Room, Battle, East Sussex

Do you feel ready to join in with the Government's August scheme to help boost spending within the hospitality sector? From the friends I have spoken to, this scheme feels like a mixed blessing. On the one hand, they are keen to get out and have a meal, enjoying a sense of normality in this strange time, but on the other, they can be fearful that too much of a sense of normality is what will lead to a rise again in cases of coronavirus.

I've been out for a couple of meals since restaurants were allowed to re-open again at the beginning of July and personally I have found them to be fine. We booked for a time we knew would be less busy and found there is excellent distancing between the tables and considerate servers. So, for us, we will be joining in with this scheme and enjoy taking advantage of 50% off food and non-alcoholic drinks at participating businesses.

I felt it was apt to be organised, as all restaurants have less capacity than normal and booking is encouraged for most good restaurants, so I have booked for one night a week to try out a few new places and have some (hopefully) really enjoyable meals. My husband said to me to book for the ones that are normally more expensive and we might avoid, as this gives us an affordable way to try them out.

Making Savings with my 1066 Card in East Sussex

Going to Hastings? Think 1066 Card.

A post shared by Town City Cards (@1066card) on May 27, 2018 at 8:21am PDT

Previously the TownCityCard was known for the towns it served, so it was the Hastings Card, Battle Card, Hailsham Card etc but now all the cards for all the different areas are coming under the unified name of the 1066 Card. This is a really good thing as it will alleviate any confusion and mean that you, as the customer will be able to tap in to discounts at over 360 places across East Sussex and in to Kent. 

I've had my card for a couple of years now and the hardest thing for me is remembering to use it. I often purchase my items and then afterwards realise I should have got my 1066 card out of my purse! So don't be like me, make sure you present your card with everything you purchase in local shops, restaurants, cafes, takeaways and days out venues. Even if that venue doesn't take the card at that point, ask them if they want to, as I know Chris, whose business it is, is always keen to meet new interested local businesses and to bring them on board.

I love the idea of shopping local and not just putting money in the pockets of the big chain stores and this is what the 1066 card is all about. You can purchase your own card from loads of local shops, council offices and the tourist office in Hastings but probably the easiest way to get it right now is to buy it direct from the website and it will arrive promptly in the post. Mine came within a couple of days. The cost is just £9.99 and it lasts until the end of the year.

Could They be the Coolest Grandparents Ever?

I often think about how lucky my kids are. They have wonderful Grandparents and enjoy spending time with them. On the one hand I wish I'd had my children when I was younger and then my parents would have been younger too and that would have given them a lot more time before health complications got in the way of some of the things they want to do.

However what will be, will be and here we are. Yes, both of my parents have health ailments that now limit some of the activities they can be involved in but does that stop them having fun? Not at all.

For the last four years the children and I have headed off to Poole in Dorset with them for a fun week away whilst my husband is busy at work and when I ask the kids what their favourite type of holiday is, so we know what to book next year, they always say the one with my parents. Why? Well lets look at some of the qualities of my parents and get an idea of why my kids love them so much -

Have you heard about the changes to ISAs?

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I'm a bit behind the times with money investments it has to be said. Dh and I have never before had the money to invest whilst we had a mortgage taken out when we were both earning large salaries and then, of course, I left my well-paid job to work part-time and look after our children.

Things changed last year though when we moved down here to East Sussex and sold our house. Whilst we have far less income now we don't have to sort ourselves out with a house and this means that we can use some of our house equity to invest. There are all sorts of ways to use your money to ideally make more for the future. You could buy RKT shares, take out some bonds or go with a more traditional saving plan, like taking out an ISA or two (it has been the end of the financial year after all).

The basics - what is an ISA?
An ISA (or Individual Savings Account) is a way that you can save for the future without paying any income tax or capital gains tax on the investment returns if you are a UK resident. There are currently two types of ISA accounts - Cash - this is a bank savings account where the interest is added tax-free and Investment (or Stocks and Shares) ISA - this allows you to invest in a wider range of investments (including cash and bank accounts) in a tax-efficient way.

The New ISA (NISA)
The Chancellor has announced that from 1 July 2014 there will be reforms to make ISAs into much simpler products, the New ISA (or NISA for short). This change will impact all existing ISAs as well as new ones and this is great news as it means those of us with existing ISAs will benefit from the changes.

What are the benefits?
Currently, there is a limit of £11,880 that you can put into your ISAs in any one financial year and the cap on the amount that can go into a Cash ISA is £5,940. When the New ISAs start in July 2014 the yearly subscription limit will change to £15,000 overall and you are free to decide how you split that £15,000 between a New Cash or New Stocks and Shares ISA. You might even decide not to split it at all and just have one New Cash ISA account with the full £15,000 invested in it (or of course put it all into a New Stocks and Shares ISA if that is what you desire). More choice of how you can invest your money has to be a good thing, right?

As well as the increase in the subscription rate for the financial year 2014/15 there is also increased flexibility for transferring your savings between the New ISAs. Never before have you been able to convert a Stocks and Shares ISA into a Cash ISA but from July 2014 this becomes possible. In fact, you can convert both Cash and Stocks and Shares ISAs into either the same or the other product as you wish.

The New ISAs will still allow you to transfer between providers and to withdraw your funds as necessary.

In summary -
I hope this has made sense if you want to reinforce what I've said then have a look at this super easy video from Scottish friendly

In search of Instant Gratification

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 The last few weeks have seen me do a lot of pondering about the world we now live in now and how the west has become obsessed. Obsessed with ownership, with money, with things, with wants, with greed and you know what? It is making me feel a bit sick really.

Sick because I feel as if I get sucked into the madness every so often.  When my parents were kids if something new was required for the home and it cost a bit, then everyone scrimped and saved for a few months (or even years) and then they bought the new item.  No credit and certainly no instant gratification.  Hard work led to a great sense of achievement when the new sofa or bed arrived and I expect it was enjoyed and cherished much more as it was really worked for.

Nowadays something breaks and we go out and immediately buy a replacement, not because we have a ton of money but because that is the way things are done now. You use a credit card, some people then transfer that balance to another with a zero interest rate or you get a loan.  There is nearly always an means to get some money fairly easily as long as you have some equity. That is unless you have a very sensible husband like I do and boy am I glad of his traditional values and caution.

Very recently, well actually about 4 months ago now our front door broke and luckily it is sound in that we can lock it and be secure.  It opens from the inside but from the outside it is dead and this means we are having to use our back door now.  My instant reaction was that we had to get it fixed immediately and I made an appointment with a door supplier.  Things didn't progress and now here we are months down the line and I am so glad. We do not have the money to buy a new door and it is really not important in the scheme of things. How crazy that I even considered spending £900 we do not have to fix a problem which presents just a minor inconvenience.

What I have found is that these kind of inconveniences, of not having everything perfect, of having to wait while we earn the money before we spend it are teaching me an important lesson.  They are helping me to be real, to be fallible, to be humble and to be grateful for all that I have.

Many, many people have lots more than me. Yes I would love to change our dark oak 80's kitchen, we need a new bed for JJ, carpets for upstairs and of course a new front door. My bathroom needs re-grouting and the downstairs toilet needs a coat of paint but so what?  We have a wonderful warm house, a bedroom each, enough food to feed us all, schooling for the kids, jobs for dh and I and that makes us incredibly rich.  Richer than much of the world.

Isn't it good to stop once in a while and to take stock of the richness that is already in your life? I hope I can keep this humility that I have found in the last few months.

Am I alone in this?  Or do others agree that society just has too many wants and demands nowadays? Sometimes I do wonder if I have just gone a bit bah humbug.

I see I'm not alone as Cass has written about 50 ways to save money.