The most difficult part of saving for college is getting started. It might not seem so urgent, since college is many years away in the future. There are so many other things that you may need or want to do that it is easy to keep on putting it off until the next day and the next day.
By the time you realize that a decade has passed, paying for college is much more of an immediate issue, yet it has also become much harder to reach the same college savings goal.
Time is your greatest asset. Don’t squander it. If you start saving from birth, a third of your college savings goal will come from earnings. If you wait until your child enters high school to get started, less than 10% of the savings goal will come from earnings, and you’ll have to save six times as much per month to reach the same college savings goal.
Causes of Procrastination
There are many causes of procrastination when it comes to college savings. Most involve negative energy holding you back from taking the steps needed to get a college savings plan set up.
- Fear and anxiety. You fear the unknown. You fear the potential for negative consequences. You fear failure. You fear the possibility of losing money on investments in the college savings plan. Fear can be a source of stress. You worry that you won’t be able to save enough to pay for college. You worry about making a mistake that will ruin your child’s future.
- Loss of control. Loss of control is one of the reasons why some borrowers do not sign up for autopay on their student loans, where the monthly loan payment is automatically transferred from their bank account to the lender. They don’t like the idea of the lender being able to reach into their bank account to take the money, even when lenders offer an interest rate reduction as an incentive. With 529 plans, you might worry about the limitations on investment options. You may worry about what will happen to the money if your child decides to not go to college.
- Too much work. If a project is too big, too difficult or will take too much time, you will feel overwhelmed and never get started. You’ll make excuses, such as “I’ll do it later, when I have more time.” There are many steps in setting up a 529 college savings plan, such as researching state 529 plans, choosing an advisor-sold or a direct-sold 529 plan, transferring the money to the plan and choosing the investments.
- Decision fatigue. If a project involves too many choices, those choices act as barriers to getting things done. It can also cause you to fail to prioritize tasks according to their importance and urgency.
- Not enough money. You might feel that you don’t have enough money to save right now. Your budget might be tight because of more immediate bills and debts.
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- Waiting. You might not get started on a task, or fail to take a crucial next step, if you are waiting for someone else to do something. You might be waiting for someone to tell you to get started saving for college.
- Distractions. It is so easy to get distracted these days, given the constant interruptions email messages, telephone calls, text messages, meetings and social media. This causes you to become more impulsive and to lose focus of attention. You find yourself chasing after the latest shiny object instead of pursuing the work that needs to be done.
How to Stop Procrastinating
Since there are many causes of procrastination, there are many possible solutions. It may be best to use all of these solutions.
Break up the task into small baby steps. Focus on just the next action you need to take. Taking it one step at a time makes a big task more manageable. It helps you avoid getting overwhelmed by all the details. Taking small steps makes it easier to get started.
Use our College Savings Calculator for motivation.
Try to minimize the number of decisions you need to make. Limit the decisions to the most important aspects, such as how much you can contribute each month. Or, do what most people do, such as:
- Use a 529 college savings plan, instead of a prepaid tuition plan or Coverdell education savings account.
- Choose a direct-sold 529 plan instead of an advisor-sold 529 plan unless you already use a financial advisor for managing the rest of your money.
- Consider an out-of-state 529 plan that charges very low fees, especially when your child is young.
- Consider your own state’s 529 plan, if your state offers a state income tax deduction or tax credit on contributions to the state’s 529 plan, especially when your child is older.
- Decide how much to save each month. It does not need to be perfect. If money’s tight, you can start small and increase the amount you contribute later, when there is more flexibility in your budget. Many 529 plans let you get started with as little as $15 or $25 a month. You have a lot of time to figure out how much to save after you get started.
- Make the saving automatic, so you don’t have to think to save. Sign up for an automatic investment plan within your 529 plan. Automatic investment transfers a specified amount of money from your bank account to the 529 plan each month. Some employers offer payroll deduction of 529 plan contributions. An added benefit of automatic investment is that you can set it up and forget about it until your child is ready to choose a college. If you don’t set up automatic investment, then add a reminder to your calendar to give yourself a nudge when it is time to save.
- Within the 529 plan, use an age-based asset allocation.
Review your college savings plan once a year, to decide whether to increase the amount you save each month. It is easier to increase how much you save each month after you start saving than to jump right in with a high amount. You will quickly get used to having less money in your checking account after you set up the 529 plan with automatic investment, making it easier to increase the amount you save.
Also, consider making an extra contribution each year when you get your income tax refunds. Likewise, when the child no longer needs diapers or daycare, redirect your spending as a contribution to their 529 plan. Ask friends and family to give gifts to your children’s 529 plans instead of giving traditional holiday and birthday presents.
If you feel stuck, try to motivate yourself to get over the hump. Give yourself a small reward for taking steps toward saving for college, so you have an incentive to take action now. It will also reinforce your mindset, making you less likely to procrastinate the next time. For example, you can think about how you will feel when your child graduates from college. Or, treat yourself to your favorite food or beverage when you start saving for college.
Think about saving for college using positive terms, to counter the negative energy that is stopping you from saving. Focus on the actions you can do, not the reasons why you can’t. Think about specific steps you can take, not abstract goals.
If you are prone to distraction, carve out some distraction-free time by putting your cell phone in airplane mode. Read your email only once a day, at the end of the day. This preserves your morning time for getting things done.
Talking to a financial professional can sometimes give you the impetus to start saving for college. There are also apps and tools that make it easier to save, such as CollegeBacker.
At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.