How to Save for College (before your child is born)

My daughter turned eighteen yesterday and is going to be attending college in October. Now that we are finalizing the process of filling out all the financial forms, loan applications and sponsorship applications, I am beginning to realize that I should have started saving for college eighteen years ago. When I look back on it I realize that there are many ways in which I could have prepared myself for the financial burden of college.

Difficulty: Easy

Instructions

1. Join the site Upromise.com when your child is born! This site pays cash back on thousands of products, including many that you find in your local grocery store. Not only that, but you can link your family and friends to the account and have their purchases add cash back to the account. I started one just six months ago and have about $300 saved.
   
   If this had been around 18 years ago I'd have over $10,000 - and as you can pay this money into a 529 savings account, I would have also had interest on top of this.

2. Open a 529 savings account. Not only are there tax benefits for doing this, but with just a small amount paid directly out of your paycheck every month, you'd be surprised how quickly this will grow. For instance, a monthly payment of $25, even without interest, will grow into over $10,000 in 18 years.

3. Look at your monthly habits. Do you buy two cups of coffee a day? Once a week, instead of buying two cups of coffee, buy one. Take that saved dollar and put it into a savings account. You'd save $52 a year, or almost $1,000 in 18 years. Cut out two cups of coffee a week and you'll double this.

4. Even if you're not planning to have a child for another ten years, start saving now. The extra ten years of saving could mean that when your child attains college age, you'll have most of the costs covered.

5. Every time you buy something, throw the loose change into a container and forget about it. Every year, going to your local bank and use their coin machine - you'll be surprised how much you can save this way in a year. I recently cashed in a year's worth of coins and had over $750. After 18 years that would be a staggering $13,500.

Tips & Warnings

• Every penny counts. Even if you can't afford a lot, saving $1 a month and then topping up the savings when you can afford it will add up over 18 years.
• Ignore the money once it's in the savings account.
• Don't be tempted to take 'loans' from the savings - you'll find that you'll forget to pay it back.

[karileighk]

on 6/26/2009 Good to read now. *5