“The days are long but the years are short,” is a popular saying among parents. The problem with this statement is that it’s totally true. The years will fly by and before you know it your baby will be headed off to college. Have you saved enough? Have you saved at all?
With the rising costs of education, saving for college seems like an impossible task for many parents. But if you think about it right for the start and plan for those costs, you may be able to help pay for some of your child’s schooling or even all of it.
My husband and I decided a long time ago that we wanted to try and pay for college for both our kids. His parents were able to pay for his schooling. I had student loans and here I am almost 20 years later still paying for my undergrad degree.
As I’ve looked more options to help us make this a reality, I’ve uncovered that there are actually a lot of ways to save. I’ve grouped these together below along with some advice.
Ways To Save
Normal savings accounts
The most basic way to save, and the way my husband and I have so far been saving for college, is a savings account. We add money to it on a regular basis and are keeping our fingers crossed this will be helpful when it’s time for our kids to head off to school. A basic rule I’ve found is that you want to save about $2,000 a year to be able to pay for some of your child’s schooling. However, we realize that we have to bump up our efforts here so there are other ways we are considering saving for their futures.
Automatic paycheck withdrawals
Most employers offer the opportunity to split your check among several different accounts. This is beneficial when trying to save for something because you never have to “see” or even move the money. Also, because this happens automatically you get used to living without that amount each month. You can also increase it as your income increases or just leave it for years. Adding this to the normal savings account option could help you save twice.
Keep the change
A keep the change program or roll over extra cents through your bank can also help you save. Basically, programs like this round up your purchase – every purchase – to the next dollar and that change can be put into another account. Currently, I think I’ll be changing this so it moves to one of our kids’ accounts.
Investment Savings Plans
Plans like a 529 or Roth IRA off investment options to save for college. Think of these as 401k-type plans for college savings. I currently have a Roth IRA for my retirement but it’s good to know it could be an option for saving for school too.
Maybe you can’t afford to save each month for your children and that’s completely understandable with the rising costs of everything. However, when you receive your tax return you might have some extra money you can invest. Even if you only once a year, it can still add up by the time kids are 18.
Education savings accounts
These accounts are similar to 529 and Roth IRA plans but they limit the amount you can contribute to $2,000 per year. And you can only add to them until the beneficiary is 18-years-old.
Your kids can help save
When you child gets their first job explain to them that a portion of their earnings will go towards their college savings – no matter what kind of plan you go with. Make it a set amount or a percentage based on their job. This will not only teach them that their education is also their responsibility but it will help them learn to budget. They can also continue to do this through college.
No matter how you decide to save, or even if you decide to save, remember these tips:
As I say this I know I’m already behind. We were good about doing this for my daughter but we have not been as good about it for my son. Since I’m not currently working (or at least working in a way that allows us to plan accordingly) saving for them in general has become a problem. However, it’s never too late to start and you can always add a little more to the amount when it’s affordable to help alleviate any gap.
Set realistic savings exceptions
No matter how you’re saving for college you need to be realistic about the money. You can’t save $200 a month per kid if you don’t have it to spare and if it puts other priorities in jeopardy. Maybe you can only afford $50 a month. Realize that’s still something and even small amounts of money can add up to pay for things like books or room and board.
Utilize a combo approach
You can use a combination of the ideas mentioned above to get you to the end dollar goal. Using a bit of this and a little of that can add up to a lot of money that can be put toward an education.
How are you saving for higher education? Or if you’re not tell me why below.