Last Updated: Nov 14, 2012
The cost of college can be an overwhelming thought to most parents and it often leads to complete denial and avoidance. However, saving is easier than it appears and here are some tips to help you and your family get started so you can avoid college debt before it starts.
Here are a few quick facts about the benefits of starting early:
- If you save $5,000 for college, it can save you thousands of dollars in interest payments on student loans you might otherwise have to take out and pay back after college.
- If you save $5,000 by the time your child is five years old, it may be worth over $12,000 when he/she goes to college.
- If you put your savings into a 529 college savings plan, your fund manager will invest it and the earnings will be tax free when you use it for college.
Here is the single biggest thing you can do today to plan for college: open a 529 college savings plan. You can open most plans with a $0–low initial deposit and $0–$25 minimum contributions. Even if you don’t think you can contribute to your college savings plan because of your tight budget, the mere act of opening one may free your pocket book up slightly—even if it’s only a few dollars a week! If a 529 college savings plan is not the right saving vehicle for you, then use whatever you are comfortable with, but make sure it is dedicated to your child’s education and not something you pull from for special occasions.
So, how do you save money on an already tight budget? Here are some simple ways your family can save money:
Eat at home
The single biggest thing you can do to save money is to stop eating out. Even if you aren’t Betty Crocker, cooking delicious, healthy meals at home has been made easy by sites like Epicurious and chefs like Rachael Ray. If you eat out three times per week, you can save almost $6,000 in one year by eating at home!
Buy “smart” at the grocery store
All this takes is a little bit of planning. Here are a few things you can do to reduce your household grocery bill by 20%–30%:
- Limit your shopping trips to twice per week. The less you go, the less you impulse buy—it’s just a fact!
- Plan your meals around weekly specials. Your main course can almost always be something fresh and on sale from your grocery store.
Make your own coffee
Even if you are a Starbucks fanatic, you can do it. Invest in a good coffee machine and buy your favorite Starbucks coffee at your grocery store (stock up when it’s on sale) and you can save $600 per year.
Then, put all the money you save into your 529 college savings plan!
For more information about 529 plans and how to save for college, keep reading CollegeXpress and visit www.GiveCollege.com.