As a parent, you know better than anyone how much a college education can cost, as well as its value in your child’s life. You’re plugging along, working, saving, all for that time when you can send your “baby” off to college. However, you may be going about it all wrong. Here are three mistakes you’re making.

1. Playing it safe – too safe. Most people are putting their money in low-risk options that also happen to have a low rate of return. Think savings, checking, CDs, etc. You may get peace of mind with these types of options, but they’re not going to pay for the incredibly high price tag of college. Not by a long shot. Those tuition bills are growing every year, at an estimated five percent. Short term investments for long term growth don’t always work out the way you plan. Those 1.5 percent savings rates are not nearly enough to keep up with inflation, so really you’re losing money there. If you can’t stand the thought of volatile stocks, at least try 529 college savings plan, which give you tax free money when you use it for qualified college expenses. Perhaps the thing that scares you about stocks is the possibility of being taken for a ride due to fraud or negligence on the part of your broker. In that case, be sure to stay on top of every transaction, read the fine print, and get a securities fraud lawyer on your side.

1. You’re using a custodial account. This used to be the way to go many years ago, with parents saving up for college using a custodial or minor’s account. Basically, you hand selected your own investments, socked your money away, and enjoyed a lower tax bracket thanks to your kid. Now, with the new changes to those accounts, it’s no longer profitable to use them. Instead of taxing at the child’s lowest rate, they are taxed at the parents’ highest rate. Not to mention, custodial accounts are not looked upon favorably when it comes time to review your application for financial aid. Instead, put those assets into a custodial 529 savings plan, where the money can be kept tax-deferred.
2. Failing to save at all. The worst thing you can do is not save at all. Sallie Mae stats reveal that more than half of all families have no college savings to speak of for their kids. Whether you don’t have the extra money to do so, you haven’t thought about it yet or you assume your child will get plenty of financial aid, it’s time to start getting on track. The earlier you save, the more you’ll have. Period. Make it easy on yourself and set up automatic withdrawals through payroll at work.

Saving for college isn’t easy but it’s worth it. Start a fund for your child as soon as they are born. Their 18^th birthday will come quick!