If you're a parent, you already know how much time and money goes into raising a child. And if you're not yet a parent but you expect to be, you better be ready for the financial discipline required to raise a family. When the time comes, you'll probably want your child to attend college so that he or she can have the best chance of making the most of professional opportunities in adulthood, and one of your concerns will be how much you'll be able to help them financially in order to realize that goal.



The costs of sending a child to college have increased dramatically over the last several years, and the likelihood is that the trend will continue to rise. Our colleges and universities are among the best in the world. Many foreigners come to the U.S. to take advantage of that opportunity, and the competition for acceptance can be intense. What's more, you can expect the annual cost of a college education to increase by as much as 10% annually, depending on the institution. Tuition for private education is always more expensive than publicly financed education (but that doesn't necessarily mean that enrollment in a private institution is better than an education available at a state-funded school).

The question you face is twofold: What's best for my child, and what can I afford? Obviously, the more children you have the greater the potential burden on you financially. How can you make the most of your resources?

Teach your children at an early age about the value of money and how to earn and save it. The sooner they appreciate the concept of financial responsibility, the more they'll be willing to generate income by working to help pay for their college expenses.

Encourage your child to maximize his or her abilities during the formative years. The better the habits developed as a student, the more he or she will benefit from an education, no matter where he or she is enrolled. Student scholarships are worth their weight in gold. And if your child is interested in athletics, an athletic scholarship may also be available.

When preparing your personal financial plan, be sure to allow for a reasonable projection of the future cost of a college education. Open a tax-deferred Education Savings Account (ESA) to help you accumulate savings, and make regular contributions whenever possible. Of course, the amount you can save and invest for this will depend upon what you earn and what your other current and future savings needs may be, so be sure to set your priorities accordingly and be realistic about your objectives and expectations. Applying for student loans may be necessary, but it will be better for both you and your children if you can avoid them whenever possible.

If you have more than one child, be careful not to favor one over the other when it comes to paying for their education. The possible negative implications might be worse than the challenge of saving for it.