If you’re like most parents, you may find yourself wondering how much you should be saving for your child’s college education. It can be difficult, after all, to pinpoint an exact figure or decide how much to set aside each month.
In an effort to provide parents with some guidance on the subject, Fidelity Investments recently unveiled its ‘2K Rule of Thumb.’
Here’s how it works:
Multiply you child’s current age by $2,000. The answer should give you a rough estimate of how much you should have saved at that point in your child’s life. So for example, if your child is 6 years old, the rule says you should have saved about $12,000 at this point.
It’s important to note the number is based on a goal of saving half the “sticker price” of what a four-year degree costs at most public, in-state universities, which, according to The College Board is now more than $20,000 annually including tuition, room and board and fees. That figure could be higher or lower here in South Carolina depending on which college your child ultimately attends.
Either way, Fidelity acknowledges its 2K rule is not a one-size-fits-all answer but rather a “much-needed starting point” for families to begin planning.
“We agree wholeheartedly with the need to begin planning,” said South Carolina Treasurer Curtis Loftis. “The rule of thumb is a great way help start the conversation because the important thing to keep in mind is, no matter where your family is in the planning process, it’s important to start saving as soon as possible and a dedicated, tax-advantaged 529 account such as the Future Scholar College Savings Plan is a great way to get started.”
To learn more about the new ‘2K Rule of Thumb’ read on: https://www.fidelity.com/about-fidelity/individual-investing/dont-know-how-much-you-should-be-saving-for-college