With speculations on the outrageous cost of college in the future, it’s no wonder parents start to sweat when thinking of saving for their child’s college fund. Putting back enough money doesn’t have to be stressful, though, if you follow some of the tips below and take advantage of these tools. Whether you are planning for your newborn’s future or your teenager’s imminent education, are a grandparent wanting to help, or are soon to be a student yourself, you will find plenty of help here to start your college fund the smart way.
College Savings Tips
These tips provide great information for getting started and ensuring you continue to build your college fund successfully.
- Start as soon as you can. Whether you are expecting your first child or you are a high school student just looking at college options, start investing as soon as you can to give yourself time to build as much money as possible.
- Save often. Put money back as frequently as you can to help build your college fund.
- Get your finances in order. Make sure you have a good handle on your personal finances and spending habits to ensure your success with your investment and saving goals.
- Understand the risks and benefits of your investments. Every investment has risks and benefits. Make sure you clearly understand each before you invest any of your money.
- Diversify. Split your investments into a few different types of accounts. Putting money into separate types of accounts not only adds a layer of security so that you don’t lose everything in one bad investment, it also allows you to invest some money into safer accounts with lower returns while investing other money into riskier accounts with higher returns.
- Go automatic. Making automatic payments each payday removes the money before you even miss it and ensures you are contributing regularly to your investment.
- Ask for gifts. Ask friends and family to consider contributing to college funds for birthday and holiday gifts they would normally give anyway.
- Invest unexpected income. If you receive a large gift, get a large income tax refund, or get a bonus at work, invest that money so that it will work for you in the long run.
- Increase your savings. Build an increase into your savings goals. If you receive a raise, bump your savings by that same percentage. Even if you don’t receive a raise, make sure you are increasing your savings rate at least once a year to keep up with tuition inflation.
- Redirect money. When you finish paying something off such as a car or child care when your child enters school, then redirect that money to your savings.
- Examine spending habits. Track your spending for a few months, then take a close look at where your money is going and determine if you can cut back on certain areas and invest that money instead of spending it.
- Involve your child. By instilling the importance of a college education and teaching responsible financial management, you child will be better equipped to graduate college with financial savvy and without excessive debt.
Specifically for parents (and grandparents), these articles offer tons of tips to help you fund your children’s education.
- How to Start a College Fund. The basic information offered here is a great place to start if you aren’t sure about how to save for college.
- Why You Shouldn’t Put College Fund Money in Your Child’s Name. Learn one reason why you should not put you child’s name on the college fund.
- Investing in a Child’s College Fund Versus Paying Off Your Mortgage. This article offers insight and helpful advice on evaluating which financial path you should take.
- How to Set Up a College Savings Account. Watch this video to learn about the benefits of a 529 plan.
- How Safe Is Your College Savings Plan?. Learn about the risks of 529 plans in the current economic environment and what you can do to protect your investment.
- College education funds trump retirement savings goals. This brief article offers a thought-provoking look at those forced to choose between saving for college or retirement.
- Great Ways to Fund a College Education Even If You’re Not a Millionaire. If you need a supplement to your college savings, check out the suggestions here.
- Send Your Kid to College Without Going Broke. This article focuses on ways to find quality education at community colleges and public schools that can reduce the cost of higher education without sacrificing the end result.
- Funding your child’s education. This article offers a good breakdown of the benefits, tax breaks, and regulations behind four popular savings plans.
- Planning for Education Funding. Five education funding myths are examined in this article.
- College education funding for the divorced parent. Find out ways that may help you start a college fund if you are a divorced parent.
- Funding a Grandchild’s College Education. Learn about several options grandparents have when contributing money to a grandchild’s education.
The following list offers some of the most popular options when it comes to setting up college funds.
- 529 plan. These state-sponsored plan usually come in two forms: prepaid tuition plans and savings plans. They are free from federal taxes and you can usually join any plan no matter in which state you reside.
- Coverdell Education Savings Account. If you earn less than $110,000 (or $220,000 if filing jointly), you can contribute tax-free up to $2000 a year into an account that goes to a named child for educational expenses.
- UGMA and UTMA. Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) allow gifts to be given to children in custodial accounts–such as from grandparents. Investments of up to $12,000 a year can be made without gift taxes applied and the money is often taxed at the child’s rate.
- Savings account. Setting up a traditional savings account is a very safe way to save money, but doesn’t earn as much in interest. If you plan to contribute an amount each month to reach your savings goal, however, it is a good way to build money.
- CDs. Another safe way of saving is to put your money into Certificates of Deposit. This money stays in the bank and remains unavailable to you for a specified amount of time with higher interest rates corresponding to longer investment periods.
- Education Savings Bond Program. Certain US savings bonds can be cashed in and used for qualified educational expenses without some or all of the interest money being taxed.
- Mutual funds. Mutual funds offer a diversified way to invest in the stock market while building a college fund. Read about the pros and cons in this article from Vanguard.
- Stocks. Investing in individual stocks can be risky and is not suggested for those with little investing experience, but it can provide a big payoff if you know what you are doing.
- Tax breaks. There are several tax breaks for those saving or paying for college. Learn how you can take advantage of the tax breaks here.
- Upromise. Read an overview of all Upromise has to offer for college savings through your regular spending in this article.
College Fund Tools and Calculators
Find out exactly how much you should save, how much you may need, what type of school you can afford, and more with these tools and calculators.
- College Savings Plan Comparison Chart. This chart offers a break-down of various savings plans and how they are managed.
- College Savings Calculator. This calculator will help you determine how much you should save and ways to make the most of your saving.
- College Funding Calculator. Plug in information about your savings, how long you have to invest, and your annual contribution to determine how much you should be investing now to pay for college.
- How much can you save?. This tool helps you calculate how much money you can save over time.
- Savings Calculator. Find out how much you can save to meet your college fund goals with this tool.
- How Much Should You Save?. Use this worksheet to determine how much you will need to put back for college expenses.
- College Savings Calculator. This calculator takes into consideration such variables as the type of school, commuting vs. being on campus, and more.
- Which college savings option is best for me?. Use this tool to help you decide the best type of investment for your college savings goals.
- 529 College Savings Tool. Figure out what you need to contribute to your 529 plans for each of your children with this tool.
- Calculate how much you’ll need to save for college. Not only will this tool tell you how much you need to save, but it can offer suggestions for changes you can make to better meet your goals.
- School Affordability Analyzer. Find out how much the schools of your choice will cost you, how much aid they typically provide, and the best options for your specific situation.
If you are heading to college soon or are already there, these tips and tools will help you cut back on expenses and fund your education the smart way.
- Test out of classes. Testing out of classes before you start school leaves you with fewer classes you have to take–and pay for.
- Take the basics at a less expensive school. Sometimes you can find schools with lower tuition and fees such as at community colleges and some online schools that will transfer to a larger school that may cost more.
- Live at home. You can save an average of $6,000 a year on room and board if you live at home rather than staying at the dorm or getting a place of your own.
- Understand college costs. Understanding the nuances of college costs is important and can help you avoid expensive mistakes when considering funding your education.
- Look into scholarships. There are many scholarships available for students attending accredited colleges, but you will need to do the research to find them. Also, beware of scholarship scams.
- Become an RA. A residential advisor oversees the activities of those in the dorm and typically gets free room and board for their work.
- FAFSA. Complete your FAFSA online to determine your eligibility for scholarships, grants, loans, and work-study opportunities that can supplement your college savings.
- Federal Work Study Program. Learn about this opportunity through the federal government to work part time and earn funds for your education.
- 4 Tips to Make Money Online to Fund Your College Studies. This article offers four ways to supplement your income online while paying for school expenses.
- Financial Literacy. This page offers information and links to help you learn how to manage your money for college wisely.
- College Costs. Learn what to expect when it comes time for paying for your education and get links to helpful calculators.
- Student Finance Domain. Paying for college and money management are the focus of this site dedicated to helping college students make smart financial choices.
Finance Social Networking Sites
Join these social networking sites to learn more about finance and investing so that you can make your college fund grow as much as possible.
- Art of Saving. This personal finance social network helps members reach their finance goals, such as saving for college.
- ZeccoShare. The investment community at ZeccoShare offers investment tracking, sharing of ideas and tips, and groups where members can find support as they learn about investing.
- UpDown. Practice investing with a $1 million portfolio while you gain experience and get tips from others, and even earn real money along the way, in this community.
- Minyanville Financial Infotainment. Join this financial social network to meet other investors while learning about smart investment strategies, participating in forums, and reading blogs and articles about investing.
- My.WallSt.net. Beginners can learn about investing on this social site that helps you find out about stocks, trading, and more.
- Tip’d. For those interested in finance and investment, Tip’d offers news, tips, articles, and more to it’s members, who can vote for the most helpful information.
- MarketWatch Community. Members can create profiles to help connect with others, then share information, news, tips, and more.
- Wesabe. Learn to manage your money while connecting with others with the same financial goals.
- Kiplinger.com. Manage your finances in this community with the tools, articles, quizzes, online forums, and more here that will help you learn about personal finance.
- Zacks Investment Research. Create a portfolio, connect with community and more at this site that provides mathematically-based research to help you learn about markets and trends.
- Covester. Covester allows members to watch the investment habits of other members in order to learn how to invest their money.
- InvestingMinds. This community offers everything from investing clubs to chat rooms and provides you the chance to learn from others or share your own investing experience.
Money Management and Savings Tools
Without a good handle on your personal finances, saving is difficult. Use these tools to keep your finances in order so you can save as much as possible for education.
- BudgetTracker, Inc. Budgeting is much easier when you use this tool that helps you get control of bills, investments, bank accounts, and more.
- SaveMoney.com. Members can get plenty of help saving money with this group that includes such tools as a tip of the day and forums.
- mint. This popular personal finance management system connects your bank, credit cards, and mutual funds to help you gain control over your finances.
- How I Save Money.net. You will find plenty of tips and tools to help save money here such as organizing coupons, tracking finances, and understanding flexible spending accounts.
- billeater.com. Learn how to save money and lower your bills with the tips and forums here.
- BillMonk. Keep track of your money with this fun tool that also allows you to track items you loaned to others or that you have borrowed.
- 66 Ways to Save Money. This site offers tips and suggestions in several different categories, including transportation, housing, insurance, and utilities.
- Mymoney.gov. Specially designed for educating US citizens about financial issues, this site offers tons of information ranging from home buying to having children.
- MoneyCafe.com. Get information on everything from car loans to financial calculators to tax help at this site.
- Bank of America Financial Education and Tools. Learn about managing debt, saving for college, budgeting, and more at this site.
Online Peer-to-Peer Lending
If you find that your current college fund needs some supplementing, try borrowing at one of these peer-to-peer lending groups.
- Lending Club. Lending Club brings together borrowers and lenders. Borrowers get low rates and lenders can hand-select to whom the loan their money.
- GreenNote. Members finance loans to individual students at low interest rates on this site that is a popular alternative to student loans.
- RSF Social Finance. Borrowers in the greatest need can find loans from members at this group that focuses on social and environmental issues.
- Zopa. This finance network connects members who are seeking loans with credit unions who offer low-interest rates.
- Virgin Money. Get loans straight through Virgin Money or facilitate and legitimize borrowing and lending through family and friends here.
- CommunityLend. Members can learn about each other, hear their stories, and discover their financial experience before deciding to enter into a borrowing and lending agreement.
- Prosper. Online auction style, borrowers create a listing and set the interest rate they are seeking, then lenders bid to fund the loan.
- Fynanz. Fynanz offers peer-to-peer lending for students seeking help with college expenses. They are temporarily on hold here while the economy is down, but check back soon to participate.
- Loanio. Co-borrow with friends or family backing you or have members bid on loans to you.
College Savings Websites
These websites all focus on saving for college. Read these for great tips, ideas, and support as you grow your college fund.
- Morningstar’s Guide to College Savings. Browse through all the articles on this site that help you understand college savings and the options available to you.
- TheStreet.com College Planning & Savings. Read articles that will help you stay on top of college savings news as well as learn the best way to plan and save for college.
- College Savings Plans Network. This site is dedicated to providing you with information on setting up and selecting 529 plans.
- Savingforcollege.com. With a heavy emphasis on 529 plans, this site offers articles, tools, news, and more to help you reach your college savings goals.
- SmartMoney Personal Finance: College Planning. Ask questions and read answers at the Financial Help Line, read articles on planning for college and education options, and more here.
- Forbes Retirement and College. Check out the articles at Forbes to find out the latest in college planning and funding.
- T. Rowe Price College Planning. Find tools and information here to help you make the best investments for your situation.
- The Motley Fool College Savings. This site offers realistic information about the real cost of college as well as a close look at several ways to invest for college.
- Ken’s Saving for College Blog. Find tips, ways to save money, and information for events such as financial aid workshops at this blog from About.com.
- MEFA. Massachusetts Educational Financing Authority is a non-profit working to provide planning and financing tools to families. While some of the information here is specific to Massachusetts, much of it is applicable to families planning for college in any state.
- American Funds College Planning. Learn the basics of college planning, find out options, use the cost calculator, and more.
- Bright Futures Blog. This blog examines saving and funding your child’s education as well as related topics for ensuring your child’s bright future.