Need to save for your child's college fund? We give you tips on how to start!

If you have young children, one idea that has probably crossed your mind at least once is how you will start saving for their college expenses. It’s a very important topic to think about, considering that in 2015 the average student loan debt was over $30,000 per borrower. That’s a massive debt load for a young adult to take on; one that usually takes between 10 and 20 years to pay off!  

Simple Strategies to Help Start a College Fund

April 21, 2017

Not sure how to begin saving for your child's college expenses? We give you a good starting point!

If you have young children, one idea that has probably crossed your mind at least once is how you will start saving for their college expenses. It’s a very important topic to think about, considering that in 2015 the average student loan debt was over $30,000 per borrower. That’s a massive debt load for a young adult to take on; one that usually takes between 10 and 20 years to pay off!

But saving for your child’s college tuition can sometimes seem impossible. You have your own bills to pay, debt to take care and financial milestones ahead. But keep in mind: the earlier you save, the more money you could have when college time comes, thanks to compounding interest. You know you need to make a college fund a priority, but how do you start?

1. Take a look at your budget


The first step towards saving for a college fund is to get a grasp on your budget. You won’t be able to figure out how much you can save until you know exactly where your money is going. Making a budget will help you pinpoint areas of overspending, discover spending habits, and give you a better understanding of your cash flow each month.

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Try tracking all of your spending for two to three months. Once you have an idea of your general spending habits, find ways to cut back so you can put the money towards the college fund. Can you skip a few meals out per month? Negotiate with your cell phone provider or cable company? There are many easy ways to cut back on spending; your budget will help guide you in the right direction.

 

2. Make goals


Once you have a grasp on your budget, you can make some realistic goals. Do some research into college tuition costs, and set some savings goals based on your income, budget analysis and projected tuition costs. You should set short-term and long-term goals, such as how much you want to save in:

  • One month
  • Six months
  • 1 year
  • 5 years
  • 10 years 

The amount you’re able to save each year may fluctuate, and that’s ok! If you know of any future obligations or events that may affect your savings ability, make a note of it in your goals so that you can adjust your plan as necessary. This will help you stay on track, even when things like buying a new car or home come into play.

Discover how much you need to save for your children's college fund by using this calculator.          
  

3. Pick your savings and investing vehicles


There are lots of different ways to save for your child’s college fund. Depending on your situation, you may opt for a 529 plan or a Coverdell education savings account. You might also look into IRA options, bonds, and custodial accounts.

If you want to start small, open a separate savings account specifically for your child’s college money. You can set up automatic transfers into the account each month, making saving streamlined and simple. You may also look into placing money into a Share Certificate, which generally reaps higher dividends the longer the term.

If you need some guidance on what types of accounts to open or how to properly store and invest your money, find an expert you trust to help. They can work with you to create a plan that’s tailored to your personal situation and savings goals.

4. Stay diligent


The truth is, the earlier you start saving and the more diligent you are about it, the better off your entire family will be once your child heads off to college. You’ll help take a major debt load off of your child’s plate, plus set them up for future success.

The Census Bureau estimates that college graduates earn $1 million more over their lifetime than their peers who only hold a high school diploma, according to Dave Ramsey.

Feeling a little behind on your college savings goals and strategies? If your child is heading off to college in the next few years, check out our upcoming Lunch & Learn about Short-Term College Financing. We'll review how to financially prepare your family for this major life change. RSVP now to save your seat!


Stick to your goals and re-evaluate your budget if needed. Even if you’re only able to save a few dollars each month, it’s worthwhile! Use the steps above to make saving for college feasible and realistic. With a plan in hand, you’ll be able to make steps towards your goals, whatever they may be.

Is Your Child Heading to College Soon?

Learn how to prepare financially for this life event at our upcoming Lunch & Learn about Short-Term College Financing. 

RSVP Now

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