How much do I need to save for college?

How to Save for Your Child’s College Fund

College tuition is becoming more expensive with each passing day, which is why you need to have a solid savings plan. It is important to start saving from the start so you don’t have to worry about funding when the time comes to send your kids to college. Regular contribution to an account for your children’s college fund isn’t sufficient, you need to save smartly.

 

  • Firstly, open an account and keep it separate from all other accounts. Don’t touch the cash here except for emergencies or else you will find yourself using this account on a regular basis and it becomes a habit.
  • Don’t miss out on depositing a certain sum into this account. Set up automatic payment methods so you don’t forget – even if the amount is minimal, the total sum will slowly increase with accrued interest. Breaking the habit isn’t a wise decision. If you are able to put only $20 in the account do that till you can deposit a higher sum, but don’t skip it.
  • A regular savings account isn’t suitable – you need to try money market accounts and certificates of deposit. The interest rates are higher and casual borrowing isn’t encouraged.
  • Has some money come along that you weren’t expecting? Put it into the account. Tax refund checks can accumulate over the years to a decent amount, so you can deposit those.
  • Say you have finished paying installments on a commodity such as a car or your home; redirect a portion of that cash to the college fund. You will be surprised how it adds up!
  • Find out if you are eligible for the 529 college Saving Plan offered by the government. Interest earned on the account is tax deferred and there is no tax on withdrawals if you can prove that they are being used for education purposes. This is a very convenient savings plan.
  • Talk to your superiors in office if they offer any kind of rebate programs that help to save for college.
  • Some credit cards have a cash back program that can be used as well.

Scholarships can definitely help, but you need to be prepared in case you have to pay for 100% of the tuition. Saving for college is easier if you have a rough idea about the final figure. Stay focused on your goal – it is vital that you don’t slack off while contributing to the fund.