Simple steps to save for college
According to college planning experts, getting started with a savings plan has never been more important.
With student loans drying up, parents have been dealt a huge wake-up call. But the good news is that the grim headlines are helping young families learn that saving for college right from the very beginning is the best option.
The good news is that saving does not have to be difficult and every little bit does add up.
Here are a few simple tips that fit into parents' already tight budgets and make saving a part of daily life:
1. Start thinking about college when your child is born or even before. Time is the biggest financial resource most families have when it comes to college savings. Unlike some catastrophic expenses, college tuition comes with a pretty generous built-in warning period.
2. Open a tax-free college savings account...yesterday! There is no better way to watch your college savings grow.
3. Turn your everyday spending into everyday saving. Sign up for a credit card that deposits rewards where you really need them - into your account.
4. Educate yourself about the performance of the different savings accounts out there, as well as the tax benefits your state offers. Depending on those factors, your state's may or may not be the best choice for you.
5. Set up your account so that money is directly deposited from your checking or savings account each month. Nothing is easier than automatic savings. And saving just $25 a month starting when your child is born will yield $11,716 for college, with 8 percent compounded interest.
6. Allocate windfalls to college savings. Putting away money that is not accounted for in your monthly budget is the most painless way to save. Tax rebates, bonuses, gifts - to the account.
7. Increase your monthly savings every time you get a raise at work. You'll save more without noticing or feeling it.
And, even if college doesn't materialize for your child ñ for whatever reason ñ or, if you're fortunate enough to have a child earn a college academic or athletic scholarship and doesn't require those savings, you'll have a nice little nest egg to build on and to use at your discretion!