College is a massive expense that many people aren’t adequately prepared for when their child graduates high school. As costs of secondary education keep rising, it’s extremely important to start consistently putting away money as early as possible. Here are some saving suggestions you should start implementing ASAP.
Set a Future Savings Goal
Saving up tens of thousands of dollars for college can seem daunting- especially when you have more than one child. Don’t get discouraged! An article written by Abby Chao for hermoney.com explains, “The bad news is that college costs are expected to double again over the next 10 years. The good news? You don’t have to save for the full cost. Shoot for one-third. Why? The remaining two-thirds can be filled in by scholarships, financial aid and current income (e.g., your income or your student’s work-study). This is a rule of thumb used by financial advisors across the country, and it can also save your sanity by making your savings goal a little more realistic.”
Monthly Contributions
Financial experts say that if you think your child will attend an in-state school, you should be setting aside roughly $250 a month. If you think your child will attend an out of state school, you’ll need to save $450 a month. Lastly, if you think your child might attend a private, non-profit school that monthly contribution should be around $550. If this seems unreasonable for your family and your current budget, don’t worry. There are options available that can help you maximize the amount of savings you can accrue.
529 Savings Plans
Luckily for parents, college money doesn’t necessarily have to come out of their pockets directly. 529 Savings Plans are a great idea for each of your children. They work similar to a Roth IRA and help you invest money to increase your child’s college fund over time. When your child is younger, the money you contribute will be invested more aggressively. As time goes on and they get closer to graduating high school, the money will be invested more conservatively. This is the best option for helping parents grow a college fund for their children. The earlier you can open one of these accounts the better.
Anything Helps
The monthly contributions listed above may be way out of your budget. That’s okay! Sit down, take a look at your money and see what you can afford to set aside. When you’ve come up with a number, try to consistently save that amount each month until your child goes off to college. Truthfully, every little bit helps. Even an extra $500 to put towards educational expenses is $500 they won’t have to take out in student loans.
College costs are rising and it doesn’t seem like it’ll slow down anytime soon. Start preparing now by setting aside a consistent monthly contribution for your child’s education fund. Your efforts will mean a world of difference to your kids down the road.