We receive money questions for the More Than Money podcast. Below is a question and response. If you have a money question, you can ask it here.

Question from John:

When do you think parents should start saving for college? We have a 2-year-old daughter right now and figured now would be a good time to start.  

Response from Art:

John, thank you for your question. College expenses are understandably a concern for many parents. In North Carolina, the average cost of attending a four-year public school is around $26,000 per year, totaling over $100,000 for a child's undergraduate education.

Given these costs, the best time to start saving is "as soon as you can." However, it's crucial to ensure your finances are in order first. Ideally, you should be at Money Milestone 7, meaning you are debt-free (except for your mortgage), have an emergency fund, and are contributing 15% toward your retirement. The reason for this is simple—if you don’t take care of your finances now, your children will have to take care of you financially later. There are several ways to pay for college, but there is pretty much only one way to pay for retirement—your savings. A financially stable you is a better gift than covering their college expenses.

If you're already at Money Milestone 7, begin saving as soon as possible. Many parents choose to contribute monthly to a college savings plan, like a 529 Plan. The earlier you start, the less you need to contribute to reach your goal, thanks to the power of compounding.

How much should you save each month? This depends on your goal. I suggest aiming to cover a percentage of the expenses—perhaps half—and allowing grants, scholarships, and cash flow to cover the rest. Since college costs rise over time, base your goal on future expenses. A college expense calculator can help you determine the future cost and the monthly savings needed.

It's also important to remember that not being able to cover your child's college expenses doesn't make you a bad parent. Many students succeed in college without financial assistance from their parents. Supporting your child is a generous gift, but it’s not a requirement. You can be a wonderful parent regardless of your financial support.

John, great question! Feel free to reach out if you have any more.