I Haven't Started Saving and My Kids Are Almost in College. Am I Too Late?

Many parents have the goal of putting their kids through college so they don't have to accrue a ton of debt in the course of getting a degree. But what if you're only a few years away from your kids starting college and you've yet to sock money away for it?

It's easy to see how that might happen. It's hard to set aside money for college when you have a mortgage to pay, a car that keeps needing repairs, and other such unavoidable expenses. So try not to get down on yourself for landing in the situation you're in.

You should also know that all isn't lost when it comes to funding your kids' college education. If you're late to the savings game, here's what to do.

1. Choose the right home for your money

It may be that you're finally ready to sock away a meaningful amount of money for your kids' education. The only problem is that if you're just a few years away from that point, investing in stocks or other assets that could lose value is a risky proposition.

As a general rule, you shouldn't invest money in the stock market that you might need in less than seven years. That's because you never know when there might be a prolonged stock market downturn that takes years to recover from.

The good news, though, is that while stocks might be off the table for your kids' college fund, right now is a good time to put money into a longer-term CD. CD rates are up across the board, and banks are still paying upward of 4% for a 5-year CD. So if college is five years away, a CD is a good bet since it's pretty much risk-free (provided you're at an FDIC-insured bank and aren't socking away more than $250,000, which is the limit for FDIC insurance per depositor).

Let's say you have $15,000 available to set aside for your kids' college expenses. If you put that money into a 5-year CD paying 4.10%, you'll grow it to about $18,340 without putting yourself at risk of losing any of your principal. You just need to make sure you're able to commit to leaving that money in place for the full five years. Otherwise, you could be penalized for cashing out a CD early.

Now, you may be thinking, "Well that's great, but $18,000 and change won't cover my kids' college costs in full." And chances are, you're right. But that assumes you won't continue to add to your savings. If you keep setting money aside and opening shorter-term CDs, you can build on that $18,000 and change so you're looking at a much larger sum over the next few years.

2. Encourage your kids to make smart choices about their education

If you got a late start on college savings, it's important to be open and honest with your kids about that. And it's a good idea to encourage them to take steps to keep their college costs as low as possible.

One option is to spend two years at community college to satisfy core requirements, and then transfer to a four-year school in-state to keep tuition expenses down. If your kids are able to live at home and commute rather than pay a premium to live in a dorm, that, too, could keep your bills lower and minimize the amount of debt your children have to rack up.

It may also be feasible for your kids to work during their studies. If they're able to earn a few thousand dollars a year, they can put that money toward tuition and other expenses so they're not forced to accumulate loads of debt.

It's best to start saving for your kids' college when they're super young. But if that didn't happen, you can't go back in time and change things. So rather than bemoan your late start, embrace it and work with it. You still have options for amassing some savings to help your kids cover their costs. And if they make wise choices, they can get their degrees without upending their finances on a long-term basis.