Why you want to start saving for Junior's college now

4 Simple Steps to Big College Savings

by Marcos Cordero


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Saving for college can be overwhelming. You may not even be sure where to start on this daunting task. But with a little guidance, it can be manageable and even quite easy to incorporate into everyday living.

There are many ways that you can make a huge financial difference when it comes time to pay for your child's college education. And, considering that college costs are rising rapidly at 8% annually (compared to only 3% inflation), savings will be crucial to avoid massive student loan debt, which now exceeds credit card debt.

Here are four steps that are proven to be effective, yet simple, to help you create a college savings plan for your family.

Start Saving Early

It is easy to overlook how much savings matter in the big picture, but with college savings, this is especially true. You can't start saving for college too early. In fact, you can even start saving before birth (giving to a college savings plan is a great baby shower gift).

To exemplify what a considerable difference saving early makes, consider this. If you start a college savings plan at birth and contribute $100 per month, you'll have almost $35,323 by the time baby is ready for college! But babies can take all of your time and energy. So let's say you start saving when your child is five years old. That $100 per month now grows only to $21,015. In either instance, the accumulated savings will make a big difference when your child is graduating high school.

Calculate Your Budget Goals

Of course, we would all love to contribute the maximum amount of our income to college savings every month, but this is unrealistic. Instead, we need to look at our income and expected college costs to make feasible deposits every month, as it is best to have a pay schedule like any other bill to accumulate savings. So, you need to budget your costs, so you can easily assess the percentage of your income to save monthly in order to reach the amount you need to send your child to a public or private college.

calculator iconCalculator: What It Takes To Save For College

Use a 529 to Accrue Interest and Accumulate Savings

Using a 529 is perhaps one of the most advantageous tools available to make the most of the money you are saving. With a 529, the money you save will be tax-free and earn interest over the years, which will be extremely significant when you save from the time a child is born.

So, if you save $200 a month at 6%, you will accumulate $70,646 by the time your child goes to college. When compared, borrowing a student loan of $70,646 at 6% interest and repaying it over a 17-year term will cost the borrower $553.23 per month. The savings speak for themselves!

Discover simple ways to save for college.

Invite Friends and Family to Contribute

Many people overlook friends and family when considering college savings. But the truth is, your social network can be a powerful tool to increase savings. Sallie Mae's research shows that family and friends contribute 18% of college expenses. Tools that help aggregate college savings can make a huge difference with little effort.

So, the moral of the college savings story is that there are various methods you can use to easily save for your child's college education. It is simply a matter of being aware of the tools available and putting them to work for you.


Marcos Cordero is CEO and Co-Founder of GradSaveGifts.com.

Take the Next Step:

  • For more tips for saving for your kids' college education, visit the TDS library.
  • It's tough raising kids today! You need every time and money saving idea you can find. That's why you'll want to get our free weekly Dollar Stretcher for Parents newsletter. You'll find great ideas designed just for parents that will help your family 'live better...for less'! Subscribers get a copy of our ebook Little Luxuries: 130 Ways to Live Better...For Less for FREE.

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