Saving for post-secondary education — no matter if it’s a 2-year college, 4-year college or university, vocational, or trade school — can be extremely daunting. This is especially true as college costs continue to rise each year! We’ve compiled a list of 21 ways you or a loved one can save for college, along with a couple of tips we’ve learned along the way.
When to start a college savings plan.
As the old saying goes, it is NEVER too early to start saving for college! Whether it be for yourself or a loved one, the earlier you start saving, the more time you have to get those savings up high enough to actually help with the ever-increasing costs of college education.
If you aren’t able to start right away, for example upon the birth of your child, don’t fret. Just as it’s never too early, it’s also never too late. Any amount you can save up will help ease the financial burden that college costs will have on parents and students.
Great ways parents and family members can save on college costs.
- Qualified U.S. Savings Bonds: You can purchase bonds in an amount of your choice to help your student with college costs. These bonds are considered one of the absolute safest ways to invest in the future because they are backed by the credit of the United States government.
- Roth IRA: This is a retirement account that encourages the owner to save funds by offering a tax benefit. The money grows tax-free AND there is no tax on your withdrawals.
- 529 Plan: This is a college savings plan that varies by state. The most popular plan allows the contributor to save overtime as able.
- Mutual Funds: These are managed by financial professionals. The investment fund pools money from multiple investors to purchase securities. These funds can ultimately be spent on anything, even things that do not pertain to college.
- Education Savings Account: Also known as an ESA, these savings accounts allow you to save up to 2,000 taxed dollars per year, per child. These saved funds grow over time, and the benefit here is that they are tax-free. There is no penalty or tax when withdrawn.
- Prepaid Tuition Plan: A prepaid tuition plan allows a contributor to prepay the cost of tuition at today’s rates. This is a nice feature because the cost of college climbs each and every year.
- Custodial Accounts: A custodial account is set up by a contributor for a beneficiary. The legal guardian or custodian has control over the funds until its release. These funds can be used on anything as well, not just college-related costs.
- Start a Side Business: Starting a side hustle is a great way to tuck away that extra money for your student’s future financial needs. There are many ways to start side businesses today and various opportunities from selling makeup, health supplements, clothing, etc.
- Purchase Rental Properties: If you are in the financial position that allows for investing, purchasing a rental property is an excellent way to make extra money to store away. You should make sure this is something you are able to financially do successfully before jumping in.
- Cut Expenses Where You Can: Do you find yourself eating out a lot or spending frivolously on extras that aren’t necessities? Cut these expenses out and save that money instead!
Easy steps students can take to save for college.
- Open a Savings Account: Start saving up your birthday and holiday gift money! You can open up a savings account and deposit that money in there instead of spending it on things that aren’t needed.
- Take on A Part-Time Job: If you are able to take on a part-time job without it getting in the way of school or extracurriculars, go for it! Have your checks automatically deposited into your savings.
- Apply for Scholarships: Be sure to talk with your parents and guidance counselor to find the best scholarships to knock some money off of your tuition.
- Apply for Financial Aid: As stated above, enlist in the help of adults, teachers, and mentors to apply for aid to help you financially.
- Earn Early College Credits: Taking advanced courses, if your high school offers them, is a great way to save money! That’s fewer classes you’ll have to spend money on once you start college.
- Get Savvy with Your Old Purchases: Have old clothes, gaming consoles, or jewelry that you no longer use? Sell them! There are great consignment and buyback programs out there that you can benefit from.
- Have a Plan: Plan out how you will contribute to helping with college costs. Following a plan will allow you to have a concrete idea of what needs to be accomplished.
- Create a Savings Goal: Creating a goal for yourself, as long as it’s something attainable, allows you to actually see that you are getting somewhere! When you see yourself achieving a goal, it’s easier to stick with that goal.
- Limit Wasteful Spending: Do you spend a lot of the money you’re bringing in on things that aren’t necessities? Take steps to limit that spending each month and save it instead.
- Track Spending with Apps: There are an abundance of apps that allow you to digitally track what you spend money on. It can be shocking to view all of the spending at the end of the month — shocking enough to help you change your ways!
- Make and Stick to a Budget: If you have money coming in, sit down with your parent or guardian and create a budget for yourself. You can still spend some of that money you are earning on fun things while saving a good portion at the same time.
Trying to follow as many of these 21 ways as possible will get you ahead with your financial savings for college. Even if you can only start with one or two things on the list, just start where you can and watch your savings pile up!