Everyone knows that college is expensive, but not everyone knows how much to save for college. Read here to learn exactly how much to save for college.
There are so many things to think about when it comes to planning for college. What does your son or daughter want to study? What school does he or she want to attend? Should your child live on campus or commute? Should your son or daughter attend a community college, a state college, or a private school?
How Much To Save For College
These are all valid and important questions, but one of the most crucial questions when it comes to planning for college comes down to money. If you are wondering how much to save for college for your child or children, you’re not alone.
Financing a college education is one of the biggest parts of the equation. Read on to learn the answers to your questions about saving for school.
Starting Early
Some parents might start saving for their child’s college fund when their son or daughter is still an infant, or even before he or she is born. This is a smart move.
Unfortunately, college tuition is increasing at a rate of about 8% per year, which means it doubles every nine years. This constantly moving target can be frustrating to consider, but your son or daughter will benefit greatly from you getting started as early as possible.
Although your son or daughter will likely be eligible for financial aid – and hopefully, scholarships – to help offset the overall cost, saving early and often can reduce the amount of money that needs to be borrowed down the road.
Feeding into a savings account on a regular basis is the key. A monthly deposit every month for eighteen years will make a world of difference. You can set up automatic transfers with your bank to help this account grow, and it’s much easier than remembering to make the transfer yourself each month.
The One-Third Rule
Fortunately, you don’t have to save up the entire cost of tuition, housing, and fees before your child graduates high school. If you can and do, fantastic, but very few people reach a lofty goal like this one.
Most experts suggest creating a plan to save one-third of the estimated cost. You’ll need to adjust the cost to match the expected total when your child is college-aged rather than the current total, but if you save one-third of the future cost of school, you should be in pretty good shape.
The remainder of the cost can be covered by loans, other financial aid, scholarships, and income from summer jobs and work-study programs.
The Ten Percent Rule
When it comes to figuring out how much to save for college, the best saving plan is one that is sustainable for you and your family. If your long-term college savings is causing you to struggle in the present, it’s not going to work.
However, most families find that they are able to put away about ten percent of their income comfortably each month. Try this percent at first, and adjust as needed moving forward.
How Much to Save for College Varies
There is no single answer to how much to save for college; the response to this question varies, depending on a number of factors.
The time between now and the beginning of college, the amount of money your family can afford, and the type of school your son or daughter may attend all play a part.
The most important thing to know when it comes to saving for college is that you should save as much as you can as early as you can without making your family’s life difficult. Good luck and happy saving!
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