Have you started saving for college? For those of you who are saving for college, congratulations! Good job! Now, what about the rest of you? There are so many articles and videos out there about saving for college. Here are a few:
- Saving for college with the 529 Savings plan
- The basics of a 529 savings plan(and why every parent should have one)
- Six 529basics you need to know
- 529 Plan: Should I Invest In A College Savings PlanFor My Child?
- The average 529 college savings accounthits a record high. But it’s still not enough.
Stop the information constipation and get started! The key is to start. Open a 529 savings plan today and start saving the minimum amount each month. Set up auto deposit so you won’t have to remember to save. Put your money to work. Janet Bodnar of Kiplinger said, “Successful investing hinges on just three steps: Start soon, start small, and keep it simple.” This is a great tip for college savings.
Paying for college the wrong way
I borrowed student loans to get my college degree and over ten years later I’m still repaying my student loans. Had I saved for college and not borrowed student loans, I could be traveling more. I failed to plan. Don’t be like me. In my financial aid job, I see so many people doing the same thing that I did. They will have an unnecessary debt burden for years to come. Don’t be like them. Whether saving for yourself or for your child, save for college. Create your money plan.
Your child can help save for college
Have conversations with your child about saving money and saving for college instead of borrowing loans. Help them create their money plan. When your child receives birthday and holiday cash, add it to their 529 savings plan. Ask family and friends to contribute to the child’s 529 plan instead of buying stuff. They will be helping invest in the child’s future. When your child starts working, have her/him contribute most of each paycheck to the 529 savings plan. They’ll be investing in their future.
Be a money mentor for your child. You know that children learn by example. Be a great example of someone who saves and spends wisely. Let them know that you saved a percentage of your paycheck. “Lucy, I put 5% of my paycheck into your 529 college savings plan.” “Chad, as of today we saved the maximum amount in your 529 college savings plan for the year.” “High five!”
How much does college cost?
Part of your money plan is looking at college costs. What is the cost of tuition in your state? What is the cost of tuition at your alma mater? Tuition increases about 6-9% annually, so what will be the cost of tuition in 10, 12, 15, or 18 years? Play with the FAFSA4caster to see how much financial aid you could receive. Anticipate pay raises and increases in your household size for additional children. For example, I entered an 18-year-old child, married parents ages 40 and 38 with $106,600 annual income living in Colorado. There is a total of three people in this household. This child qualified for
The student earns work-study by working in a work-study job while in school. This money that the student earns can be saved for the upcoming school year assuming the child lives at home.
I chose the University of Colorado Boulder with an in-state tuition rate of $23,167 for one year. Instead of borrowing student loans to pay for tuition, use your 529 savings plan. If your child lives close to school, he/she can live at home to save on living expenses. Most schools require that students live on campus during the first, and possibly the second, year to interact with other students and to participate in campus activities. See if your school allows local students to opt out of this requirement.
Stay tuned for my next blog. Please share my blog with your friends.