Saving for School
The cost of college continues to rise, making it more important than ever for parents to start saving for a child’s education as early as possible. Remember, in addition to tuition costs, students need to plan ahead for college living expenses. Find out how much with our College Living Expenses tool. A variety of savings programs designed specifically for education expenses makes it easier, safer and more enticing to sock away birthday money or contribute a few dollars each month. And even if tuition expenses are right around the corner, there are options for investing or supplementing your current income.
It’s never too early to start saving for a college education. The longer the time frame between today and the day your child starts college, the longer your money has time to grow. And the earlier you start, the smaller the ‘dent’ you’ll have to place in your monthly budget to achieve your savings goal. As soon as you bring your bundle of joy home, start putting away as much as you comfortably can. There are many safe, convenient ways to save; some of which offer significant tax benefits*.
Whatever savings or investment plans you choose, starting early can really pay off. Find out more about Investments to Use When Saving for College.
If you start saving $50 a month when your child is born, assuming a conservative 6 percent rate of return, you could have nearly $20,000 when he or she turns 18.
Interactive College Planner
What will college cost for your kids? Get an estimate with our Interactive College Planner.
Supplement Your Savings
When it comes to pulling together the resources necessary to pay for school, every little bit helps. Beyond savings, here are two ways to build up funds.
1. Get a Job
Teens who help pay some of their own education expenses may take college more seriously while also developing a better appreciation for money. Even if Mom and Dad have saved enough to cover tuition, a summer job or part time work during the school year can help a teen pay for trips home, books, and off-campus dining. If a part time job makes sense for your child, work with them to set goals about what they do with their wages. Establish a minimum amount they should save from each paycheck and help them open a savings account or CD to put that money to work.
2. Spend to Save
You also can save for college by spending. Brand loyalty programs like UPromise and BabyMint reward you for shopping at certain stores, buying specific products and eating at designated restaurants. Program partners will contribute a portion of what you spend to an account. You can then transfer those funds to a college savings plan or ask for a check.
* Consult your tax advisor.
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