It’s way too easy to put off saving for those future college bills, but starting early is the key to making the grade. According to The College Investor, parents who start saving $50 per month when their child is born could end up with over $21,000 for college, while parents who start saving when their child is nine can put away twice as much per month and still wind up with less than $15,000. If you’re convinced that starting now is important, but you’re not sure how to find the savings, here are some tips for you.
Small Amounts Add
Go through your bank statement for the last few months looking for small monthly expenses you can eliminate. Maybe you’ve signed up for an online service you don’t need but never bothered to cancel. Maybe you’re still paying for that gym membership you never use. Spend an afternoon canceling those expenses, and then set up an automatic monthly transfer into your child’s college account for the total amount you’ve saved. Also, set aside a bank to collect your change and $1 bills at the end of each day. A piggy bank with a narrow slot is too fussy; make it easy for yourself by using a jar with a wide mouth. Decorate the jar if you’re crafty or keep it simple.
Sweat the Big Stuff
Look for ways to trim your biggest monthly expenses. Maybe you can refinance your mortgage at a lower rate, save big on your heating system, trade down to a more affordable car, or find some other way to trim your expenses. Anything you can do that shaves even $20 off your monthly expenses takes your child one step closer to an education.
Just Do It
High-income couples are often the last to set aside savings for college. Why? Because of the assumption that they will always have enough income to afford whatever they decide they want. But that’s a big risk to take when your child’s future is depending on you. Many things in life are unpredictable. What if your company goes out of business, the industry you’re qualified to work in becomes obsolete due to legal or technological changes, or you or your spouse becomes disabled or seriously ill? If you have enough money to set some aside, do it now.
Pay Your Child First
Your expenses will always expand to take up your available income, so you have to put money in savings first and resolve never to touch it. It’s easy to postpone making a savings deposit when money feels tight, but if you do it first, you will always find some way to pay your bills. Set up an automatic transfer to savings, and if you think you’ll be tempted to dip into that savings account for non-college expenses (or if you’ve already done so), move the funds to a 529 Plan or other dedicated savings plan to keep the money safe from yourself.
Saving for college isn’t especially difficult, it just takes commitment on your part. Set up a plan, make it automatic, and watch that account grow.