Financial planning is generally challenging. After all, you may envision one set of events but it is surprisingly easy for this to change completely simply because one part of your plan changes or has been missed.
But, with the right financial planning assistance, you can create a plan that allows you to enjoy life today and still help your kids out when they reach college.
To help you appreciate the cost of college, you should note that the average undergrad bachelor’s degree costs between $15,000 and $33,000. That’s a lot of money to find without financial planning.
You’ve probably already heard this about a multitude of things, including planning for retirement. The bottom line is, in order to save any substantial amount of money, you need to rely on compound interest.
That means the amount you are investing is earning interest and so is the interest. The earlier you start the easier it will be to raise a substantial sum. For example, investing $1,000 per year for 17 years gives you $17,000. If you add interest at 5%, that’s $50 of interest per year; a total of $850 in 17 years. But, if you earn interest on the interest the amount can be substantially more, getting you closer to the magic number.
Of course, if you don’t start investing until they are ten years old then you need to save £30,000 in seven years, even with compound interest you will be looking at a minimum of $4,000 per year. That’s a lot harder to budget for. Start early!
Choose The Right vessel
This is where professional help is essential. There are many different investment opportunities on the market, you need to put your money in one that will give you the best possible return. This reduces the strain on your finances and can even potentially give you additional funds to spend on something else.
An expert can guide you to ensure you get the best possible investment vessel.
Of course, knowing what you need to invest in and where is only part of the issue. You’re going to need to have the funds available to pay into the investment vessel. That means creating a new financial plan.
Your aim is to make a list of all your current outgoings and see where you can cut costs. This may mean changing car insurers to reduce the cost, or eliminating current subscriptions.
Don’t forget, you are committing to this financial plan for the long term, which means you need to be able to live comfortably and enjoy life. If you can’t afford the entire amount you would like to invest then invest what you can. It should be possible to increase the amount in the future.
But, no matter how much you want to help your children, don’t forget that you also need to plan for your own retirement. This is just as important as you won’t want to be a burden on your children in old age.