8 Ways to Save for Your Child’s Education
By Daniel Boylan, Instructor of Finance, Ball State University
One of the most important goals for parents is to find a way to help pay for their child’s education.
Though most parents cannot afford to pay the entire bill, on average parents will pay about one-third of the college costs. Given there may be more than one child, this task is further complicated.
With raising tuition costs, how is a parent to come up with adequate funds for their child? I suggest that starting early is the best option so the funds have a chance to grow and time to compound. Really the most important task is to start. Yes, just to start. Too often, current situations or bills give us a reason not to start – and we procrastinate, but the best option is to commit to starting. Finding “free money” is also paramount. Free money is money that is not already committed or allocated.
Here are some suggestions on how to build savings for education:
- Set up a specific account that is separate from other money; this makes sure that that money doesn’t get mixed in with other “desired items” money.
- Put your savings in a financial institution that you rarely use or that is inconvenient to withdraw from; this will eliminate the potential of an impulse withdraw.
- Automatically deduct an amount – no matter how small – from your paycheck to ensure the account will continue to grow.
- Earmark special money, such as tax refunds, rebate checks, or bonus money, to supplement the account. Often this money is not accounted for in the household budget and can be easily saved.
- Consider a special job (freelance, part-time, etc.) where the money earned can go directly to the education savings account.
- Keep a coin jar for spare change and deposit it in the account when full.
- Consider an annual garage sale to clean out your home and earn a little extra money by selling unused or unwanted items.
- Consider kicking a bad habit and devote that money to your child’s education savings.
You would be surprised how fast money will accumulate when enacting some or all of these items in a savings plan. Most of these items are designed to not force you to change your current budget or make a big sacrifice. After money starts to accumulate, there will be a positive energy that will encourage further savings.