A recent study, How America Saves for College 2018, indicates that while more parents are saving for their child's college education, many are going about it all wrong. Here are three ways parents may be missing out on getting the greatest value out of saving for college.
Saving for college using your savings account exclusivelyMany parents reported using a single type of college savings vehicle, with the most widely used being a general savings account. While using a general savings account isn't altogether a bad thing, it's not giving you some of the advantages provided by other types of savings vehicles, such as 529 college savings plans. In fact, while most people reported using savings accounts to save for college, the proportion of savings held in 529 plans was higher, according to the study.
Not creating a college savings planNearly half of parents polled say they have created a college savings plan. According to the study, families who have a plan for saving for college saved on average $22,169 - about 140 percent more than the average amount of $9,208 saved by families without a plan. In fact, 93 percent of families who have a plan agree that having a type of road map ensures that college will be affordable for their child.
Failing to set a savings goal
At the end of the day, you need to see where you are compared to where you need to be in order to reach your goals. By not establishing a specific benchmark, it'll be difficult to stay on track. The good news is that 88 percent of families, who set a savings goal, indicated that they were confident in staying the course as they continue to save money at established intervals. Start by realistically estimating college expenses, while accounting for scholarships, grants, and student aid.