College not only opens up more job opportunities for young professionals, it also equips them with a unique set of experiences and learning perspectives.
It is a fundamental milestone that bridges the gap between childhood and adulthood for millions of Americans every year. But it’s also extremely expensive.
Many parents feel stumped by the price tag that comes with a college education. According to U.S. News & World Report, the average total cost of just one year of public college is $10,116 in-state and $22,577 out of state.
For private schools, the average rises to $36,801. Nobody wants to force their child to take on crippling student loans but saving up for a sum so large can feel insurmountable.
The truth is, even if you can’t save up for the total cost of four-year college, every dollar you save towards it helps to set up your children for success.
According to Credit.com, the average student will graduate with $31,172 in student loan debt, and will pay $393 monthly. Graduates who aren’t saddled with this financial burden immediately upon the start of their careers have a great opportunity to save their money for the future.
If you have a child of any age, you should start planning for their college fund as soon as possible. Here are a few top tips for how to save money for your child’s college education.
1. Set up automatic deposits from each paycheck.
If you automatically deposit a portion of every paycheck, you won’t be tempted to put off saving for college.
Eventually, you may find that you don’t notice the missing money because it is subtracted automatically like your taxes. Even just $50 per month totals up to $10,800 over 18 years.
2. Set up a 529 plan.
Instead of simply creating a savings account, consider setting up a specific college savings fund called a 529 plan. 529 plans offer tax breaks and financial aid benefits.
If your student is dreaming of a school in another part of the country, don’t worry: you can invest in a 529 plan in any state.
3. Or set up a Roth IRA.
If your kids aren’t sure whether they want to pursue college education or a trade, it might be more beneficial to keep all of your savings in a Roth IRA. A Roth IRA is traditionally used as a retirement fund.
But unlike your Social Security savings, you will not be taxed and penalized for withdrawing from a Roth IRA early for any reason. This allows you to save up for your child’s college tuition and your own retirement at the same time.
4. Suggest college savings as baby shower, birthday, or graduation gifts.
If your well-meaning friends or family want to do something nice for your kids but they already have all of the clothes and toys they need, a contribution to their college savings can make an ideal gift.
This is especially helpful for newborns who will already receive plenty of duplicates at their baby shower, or for high school seniors who will soon come face-to-face with the reality of college expenses.
5. Encourage your child to save for their own education.
Teenagers old enough to get a part-time job can contribute to their own tuition fund. Even if a summer job at minimum wage can’t topple tuition fees on its own, it can help fund other necessities like future housing or a used car.
Alternatively, you can require your teen to save their own spending money and put the money you save into their college savings account.
Start small and grow your savings
No matter how much you are able to contribute to college savings for your child, start today. You will thank yourself later for every dollar you save now.
