How to Help Your Child Save For College

Going to college is expensive, but it’s difficult to get a good job without a college education. Many young adults rely on student loans to help them pay for college; this solution is both costly and unnecessary. Instead, parents should begin saving for their children’s college education as soon as possible after their children are born and encourage their children to contribute to their own college fund as they get older so that they will have enough money to pay for most of their college tuition by the time they are old enough for post-secondary education.

You can open a savings account for your child as soon as he has a Social Security number. Although it may seem silly to start saving for college while your child is still in diapers, it makes sense to do so; you can save thousands of dollars over the course of 18 years.

Set a small savings goal for each week or month to help you get in the habit of saving money from each paycheck for your child’s college education. For example, resolve to save $100 a month, or $25 a week, whichever is easiest. Deposit this money into your child’s savings account as soon as you get your paycheck. A modest savings goal such as $100/month comes out to about $1,200 a year. By the time your child is ready to go to college, you’ll have about $21,600, which may cover his first year of school. This figure doesn’t include interest on your savings; you may have enough to cover two, three or four years of college once your child turns 18.

As your child gets older, you can teach him about the value of money by encouraging him to save for college himself. Start by showing him his bank balance every week after you deposit money. Talk to him about what the money is for. If you give him a weekly allowance, ask him to choose a portion of his allowance to save for college and take him to the bank to deposit it into the savings account himself. This will allow him to feel like he owns his own account as well as to learn about saving and making choices about what to do with his money.

If you change jobs or your income otherwise changes, you may need to adjust how much you put into your child’s savings account. Share these decisions with your children. Explain how you made the decision and why you made the decision you did so that your child can understand. This will also help him learn how to manage his savings and income—valuable lessons for both saving for college and for managing his finances as an adult.

Finally, if your child gets money for his birthday or during winter holiday time, treat it the same way as you do allowance and allow him to choose how much of it he puts into savings. These kinds of gifts should be viewed as an extra opportunity to save for college.

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