The holidays are here and it seems like money is flying out the door. Is there a money tree in the backyard? Everything from holiday gifts, home decor, food, travel expenses, planning next year’s vacation, donating to charity… the spending spree is never ending.
Holiday spirit (or spending) is among us, but we can’t forget the other end of financial responsibility – saving. Recently I shared the reality of saving for college and how expensive tuition will be once the girls fly the nest.
The thought of paying for college when the kiddos are little seems so far way – like time is on our side. However, 18 years goes by in the blink of an eye.
The reality is, the earlier we start saving for college expenses and creating a financial plan the better.
We’re teaming up with Country Financial to share our personal college saving plan. It’s easier than you think!
Easy Ways to Save for College
Money Talks
The best thing we did before getting married? Talked a lot – I mean A LOT about money. Not just about how much bacon we brought home, but spending and saving beliefs. For the most part we are aligned, but there are many times we don’t agree on spending. He cringes knowing how much I spend on salon treatments and handbags, I could care less about a fancy car.
We found ways to work around these particular things (hello separate bank accounts).
Thankfully, we are 100% aligned on saving money when it comes to retirement and expenses related to our children.
Ten years into marriage we continue to talk about money and make adjustments as our relationship evolves and family grows.
Create a Budget
Talking about money is a great first step. Creating a family budget is the best way to understand how income (beyond monthly living expenses) will be distributed. College tuition, braces, cars, clothes – we budgeted for these things early on.
We use one Excel spreadsheet with multiple sheets to manage monthly cash flow (income and expenses) and forecast long term growth of investments. It’s not overly complicated but imperative to ensure we’re on track to meet our goals.
529 College Savings Plan
When each child was born, we set up a 529 Savings Plan within the first year of their life. It’s easy, simple and one of the most beneficial things we did as new parents.
We had the “saving for college” conversation before our oldest was born and began researching options.
The 529 plan, a tax-advantaged savings plan designed to help families set aside funds for future college costs – seemed like the best solution. At least one type of 529 plan is available in all 50 states, however tax benefits and program types vary from state to state.
What we liked the most? 529 plans are treated like an asset of the donor rather than the beneficiary, which means it doesn’t impact a child’s eligibility for future financial aid. We can donate a significant amount and
And almost anyone can contribute to a 529 plan – parents, grandparents, friends, corporations and tax-exempt organizations.
Find more 529 details here.
Be Disciplined
It’s easy to skip a month or two. Unexpected expenses happen, however we treat our college savings plan like a mortgage. It’s not optional to contribute each month. Even if it’s a small amount, we do whatever is feasible. Even if that means cutting back on other expenses.
Save Aggressively
We saved aggressively the first 5-7 years for both girls by contributing larger amounts whenever possible. The earlier this is done, the more time the money has time to grow. Our goal is to save for two years of college for each child.
The remaining two years will be paid on our future earnings, from their contribution, scholarships or student loans. It’s not realistic for us to cover all four years, but this plan gives us a head start.
Eventually the girls will be required to contribute a portion of their earnings from summer jobs.
Family Support
Grandparents love to spend money on grand babies! There are many celebratory occasions when the girls don’t need more toys or clothes so I ask my parents to contribute to their savings account.
It’s a much better investment than more toys that will eventually collect dust in the basement. The amount doesn’t matter! It can be as little as $25; every penny adds up.
Our college savings plan isn’t complicated by any means. Creating a plan that works for the family (including having fun and living life) + starting early is the key to success and eliminating future stress.
Do you have any college saving tips?
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We, like you, did the same. Opened the accounts as soon as our babies were born and contributed heavily for the first 5 years of their lives. Our financial advisor told us to stop after 5 years and let the money just gain and focus on our own retirement, which we have been doing – BUT, we are older parents, this may not be the same advise given to younger parents.
These are great tips – so helpful for saving, period! I think involving your kids is an important aspect as well – my parents never talked to me about money, so I was clueless once I was on my own.
As a Cubs fan, though, I’m not so sure about that Sox picture! 😉
Saving for college can seem intimidating because many of us only ever focus on the big picture and see the total amount in our heads and wonder how the heck we’ll come up with tens of thousands of dollars. I loved your tips! I may apply some of these to saving for our first home
Excellent tips! The prepaid college plans are a perfect way to save and having grandparents and family add to it during the holidays can help make saving a little easier.
We started our 529 plans early, too. I started using Upromise while I was pregnant! Unfortunately when my hubby changed jobs, I had to quit contributing to them. At this rate, the kids will only have enough for one or two semesters, but at least it’s something!
Saving for college is so important! I don’t have any children but I did work in the investment industry for a while and that’s the one thing I always wanted parents to walk away understanding.
I wish my parents had started a college fund for me. Now I’m up to my elbows in student loan debt. This is something I definitely plan on doing for my future children.
My husband created a budget and we also ask family to do that in lieu of gifts.
These are great tips that anyone with children can use. We are saving but always feel there won’t be enough because college is so expensive. I love the Upromise site too.
Though it’s definitely not the most fun activity out there, finding simple ways to navigate college financing and saving is so necessary. As with all things, it’s so much better to be prepared than to avoid the conversation until it’s too late. Thank you for these tips- will definitely be sending this post over to all of my friends who have kids.
These are really great tips. My oldest is 9 and my husband I are talking about starting to really save for college for him.
I like the college 529 plan, myself. One of my favorite ways to save is to keep a coin jar. At the end of the day, empty them into the jar. You will be surprised how fast they add up. At the end of the year, you have some extra to put into your fund.
These are great tips! I have three kids and one wants to be a pediatrician and attend Vanderbilt University, yikes!! We want to encourage her bright future and have kicked up our savings even more to be able to help her achieve those big goals.
Such an important topic for parents and also for us grandparents, We have a fund for our grandson where we put money regularly instead of giving him a lot of gifts. That will help a lot when he is ready for college.
These are great tips for saving for college. It can be SO expensive, can’t it? Every penny saved really does help 🙂
Louise x
These are really great saving tips. Now that we have a middle schooler college planning is starting to get real!
You have a middle schooler already? Then I realize I will next year too. It goes by too fast!
These are great tips! I think having a budget is important and being discipline. Now that’s the hard part!
I’ve heard of the 529 Savings Plan and really need to look more into this. It’s so important to save for college. My kids are still very little but it’s never to early, right?