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“Don’t Blink – they grow up fast!” This may be the most cliché sentiment you’ll hear as a parent, but truer words were never spoken. I remember making the smart decision to set up a 529 College Savings Plan for my first-born when she was only a few months old. I had been in the financial planning field for years, and I knew it was the right thing to do. At the time, I set up an automatic deduction in the amount I could afford. While cradling that tiny baby, college seemed a distant horizon – a lifetime away from that moment.

I knew to calculate how much I “should” be saving, but as is often the case, “should” and “could” can be very different dollar amounts. In hindsight, I should have saved more, but at the time, I simply couldn’t. I figured something was better than nothing, so I kept saving and went on my merry way.

Fast forward to present: My oldest child is now a mere 5 years away from high school graduation. When I recently took the time review the in-state costs of college tuition and room & board, I also reviewed the 529 College Savings Plan account and realized it wasn’t on track to meet our future financial burden. Panic set in, my heart rate increased. The current assets and potential rate of return simply weren’t in line to meet the enormous expenditure we would be facing. The wind knocked out of me, I immediately adjusted our savings rate.

Our family’s situation is unfortunately the rule, not the exception among today’s parents. A 2018 poll conducted by Sallie Mae reported that 56% of Americans with children under the age of 18 are currently saving for college, and on average, they have saved approximately $18,135(1). We were saving, in a smart, tax-efficient college savings vehicle, but perhaps not enough to cover the expenses that four years of education will bring. And, if you have more than 1 child, your future college costs multiply that much more.

For the 2017-2018 school year, the average national costs of tuition, room and board was $20,770 (Public in-state), $36,420 (Public out-of-state), and $46,950 (Private)(2). However, this doesn’t include travel expenses or supplies your student may need during their college career. If only half of Americans have saved $18,135 – it’s still shy of the amount needed for just ONE year at a public college. These parents, unable to fund the 4-year bill, (along with the other half of college-bound Americans whose parents haven’t saved at all) will likely be applying for scholarships, requesting student loans, or reducing costs by spending two years at a community college.

With the inflation rate of college costs between 2-4% over the past decade(3), planning is the key to success. To reduce anxiety about college savings for your family, meet with your advisor to review your assets, tax-efficient savings options, and education budget. Even if you have to make some compromises, having a plan in place will put you and your children in a better position to reap the benefits of college education, and minimize its impact on your wallet.

(1) https://www.businessinsider.com/sallie-mae-college-savings-typical-american-family-2018-5
(2) https://www.collegeraptor.com/find-colleges/articles/affordability-college-cost/average-college-costs-2017-2018/
(3) https://trends.collegeboard.org/college-pricing/figures-tables/average-rates-growth-published-charges-decade