Going to college is a major event in your life, and it's important to be prepared. Begin by asking yourself several important questions.
- How are you going to pay for college? (savings, loans, etc.)
- What daily costs do you anticipate?
- How do you plan on paying for your daily costs?
- What kind of financial accounts do you currently have, and how do you plan on accessing them?
- How are you managing your accounts now?
- What is your housing situation?
- What are your greatest concerns?
Below are some easy tips for saving for college. For more information and to design a plan, we recommend you work with one of our Member Service Representatives.
Save early and often
For parents, start saving for college the day the baby is born, if not earlier, and save as often as you can. The sooner you start, the more you can take advantage of compounding to watch your savings grow. It will also help you get into the habit of saving.
Save as much as you can
If you don't think you can afford to save, start small. You will find that you will adjust your spending habits, and can gradually increase the amount you save. Don't worry too much about starting small, since the compounding of interest over time will help your savings grow. The first step is to get into the habit of saving.
Rather than save money at random intervals, try to save a little every month. The more frequently you can save the better, but at the very least save once a year. If you can save with the same frequency as you receive your paycheck, you will find it easier to get into the habit of saving.
Make saving automatic
Sign up for payroll deduction or ask your credit union or bank to automatically move money from your checking account to your savings account every month. Many state section 529 plans have options where you can have money transferred from your checking account every month. If the money isn't in your checking account, you'll be less likely to spend it.
Earmark savings for college
Use a special account designated for saving for college (but in the parents' name, not the child's). This will help you save, because it will motivate you to save.
Establish a goal
If you specify a savings goal, you'll be able to measure your progress toward that goal.
Invest windfalls, don't spend them
If you should get a windfall, such as an inheritance, winning the lottery, a large income tax refund, or a bonus at work, put it in the college savings fund. It is better to save than to spend.
Increase the amount you save each year
Increase the total amount you save each year by at least 5%. So if you save $100 a month this year, you should save at least $105 a month next year. This will help your savings keep up with the college tuition inflation rate. When you get a raise, increase the amount of money you save.