Never Too Early To Start Saving For College

Very often families do not have enough income to cover the entire cost of their child’s college education and have to look at ways in which they can cover some of them – either through loans, scholarships or savings. While loans can turn out to be expensive, scholarships cannot be guaranteed. The only thing you can truly count on are your savings. In fact, if you do the calculations you will find that by saving a small amount every month, by the end of ten years, you will have a sizeable amount saved for your child’s education. Any increase in the amount you save will contribute significantly to this college fund.
If you decide you are going to save for college funds, you should start early. The earlier you start, the less the pressure will be on your budget and the more the money you will be able to save over the years. You could use any of the online college cost calculators to understand how much the total college education will cost you and how much you have to save by the time you or your child has to attend college. Once you have obtained an estimate of the costs, you should set that as your savings goal.

Now make a budget so that you have an idea of how much you are saving currently. Understand if these savings will help you reach your goal. If not, you may have to review your expenses and cut back on some of them so that you can set aside more money towards your college savings.

You can always put in the money you have saved in a savings account but you might earn better interest and save on taxes if you put in the money in a college fund or a 529 savings plan. This is similar to a 401k except that you are allowed to put in only post-tax funds in the account. However, interest earnings are completely tax-free so long as you are using the funds only for education-related expenses like tuition, boarding, room, etc.

You could also use credit cards that support reward programs for college funds. Based on the amount of purchases you have made using the credit card, they will put in some money in your college savings account. On the other hand, you may have to pay higher interest fees and so on that could negate all the savings you make so calculate the benefits of such a card carefully before signing up for it.

If you receive a windfall, like a small inheritance or a tax refund, put it directly into your college savings. Similarly, if your children’s grandparents insisting on giving gifts to your children, you could request them not to spend money on more toys and gadgets, and instead put in the equivalent amount of money in their college funds.

By saving religiously and by being creative, you can quickly save enough money to make your or your child’s dream of a college education a reality.