In an economic downturn, a terrible turning of the tables happens: those with money in the bank get penalized, while those in debt benefit. The culprit? Inflation. When inflation lifts its ugly head into view, the value of the dollar, in this case, drops. If we look at a simple model (i.e., one without interest factored in), it’s obvious why this happens.

Say, for example, you’ve got a shoebox full of gold, when some crazy alchemist in Montana suddenly gets it right and starts making gold from lead. The value of your gold, no matter how much you had, is going to drop. Your neighbors managed to get themselves into a tricky situation with some pirates: they owe quite a sum of gold. They’re in luck! It’s dirt cheap suddenly. You get penalized for saving; they get out of their debts at a much lower cost than they’d initially incurred. Silly though this example may be, it shows–basically–how inflation affects even the best efforts of the scrapers and savers.

Saving for Your Child’s Education Is Still a Great Idea
I was fortunate enough to be born to parents who had set up my college fund before I was born. I’ve counted my lucky stars time and time again for this boon that left me with a diploma and no student loan debt. My parents took advantage of higher-risk, long-term investments to avoid the perils of potential economic crisis. The goal–apart from simply making more money on savings–was to weather rough times by consistently making more on interest than any inflation would devalue the money.

The trick with these sort of investments is that they can’t (and shouldn’t) be touched in the short term. College funds are great because, if you start them early enough, you’ve got almost two decades to make money. Keep the money that you need now out of these higher-risk investments, especially in this climate.

The sooner–and smarter–you invest for your child’s future, the better off you’ll be. It’s just a good idea to get some money put away for college, so start today.