Lately we have been focusing on early planning for your college needs. We believe that the secret to saving for college, or saving for any reason, is to capture funds before they get re-allocated into other ares of spending. This has been commonly referred to as Parkinson’s law. This law was first outlined in a 1955 edition of the Economist magazine. This simple law states that expenses will always rise to the level of income. This is true: think of your last pay raise. Where did that raise go? If you did not capture it for a particular purpose, it just got absorbed into you normal spending habits. Well, here is a plan to help you resist Parkinson’s Law and turn daycare dollars into a diploma.
The Soaring Cost of Daycare
What would you say the average family spends for daycare? The number may surprise you. There are many sources to check for the actual numbers in your specific area, but a quick search lead us to 2-1-1 Childcare where we found that the average cost of daycare in our area was around $250.00 per week. Even that cost varies significantly from area to area. With a few punches on the calculator keys we found that the annual cost of day care is around $13,000.00 per year. Over the course of 4 years, that would be roughly $52,000.00.
But what happens at the end of the daycare years? First, there is usually a large sigh of relief, maybe a night on the town, but then the money usually gets absorbed into the normal spending habits. If you fight that temptation and make a plan, you can save some substantial money for college. This will take some discipline, but it will save your student thousands of dollars in debt later.
Turn Daycare Dollars into a Diploma
Let’s do some math. If you were to capture $1,000.00 of those day care expenses and set it aside in a small savings account. Let’s say that that savings account was earning 1%. You would have to search high and low to find such a thing, but let’s just use it as a simple illustration. We used bankrate.com to run a quick illustration. At the end of 12 years you would have saved $144,086.83 for your student’s college education. That is just one expense that can be captured. Can you find some more? Probably!
You can resist Parkinson’s law and turn daycare dollars into a diploma! Want to know more? Make an appointment with our office today. We can help you design a plan to capture these expenses and not create a debt crisis for you and your student.