For most parents, the moment your kids are born (or maybe even slightly before) you start to think about them attending college. Some parents even go as far as picking prospective schools for their toddler children and start dressing them up in that college’s apparel. (I can attest to seeing a few “Future Buckeye” shirts in our family!)

With all this thought being given to college attendance and selection at an early age, I think that it would only be natural that parents also start planning on how they are going to get their student to that school (from a financial perspective). Based upon this assumption, I have come up with the following tips to help guide parents through a painless approach to saving for college.

• Save Early: It is never too early to start saving for college. Ironically, it is never too late either. Some folks believe in starting a college savings fund by the time their child reaches Kindergarten. Others have started long before the birth of their first child. The earlier you start saving the better chances you have of securing a sizable college fund by the time your student is graduating from high school.
• Start Small: One of the main reasons people give for not establishing a college savings fund is that they don’t have the extra discretionary cash to put aside. This may be the case in many households but my guess is that $5 a week or maybe even $5 a month may not be too much of a stretch for families to put into a college savings fund. As time goes on, and hopefully as extra income is available, parents could increase their college fund contributions.
• Be Consistent: $5 a week does not seem like much but if you start saving when your child is born, you could have $4680 (18x52x$5) in the bank by the time they head off to college… and that doesn’t include any potential growth on the investment. $4680 could cover all of the book expenses incurred by the student during their 4 years of college. Being consistent in your contributions not only helps your college fund but it also establishes a healthy practice of saving.
• Earmark Windfalls For College: I am not referring to the lottery as a windfall on this one (although that would be nice). I am thinking more along the lines of Christmas money, Birthday cash, Bar mitzvah moolah, etc… Basically, anytime you have extra cash that is for benefit of your child, you automatically put a portion (or all) of it into the college savings fund. This usually works pretty smoothly when they are young and don’t understand how money works but as they get older and “appreciate” what they can do with their cash; you are going to have a hard time diverting some of it to a “not-so-fun” college fund. However, this will be a great opportunity to turn this into a learning moment for your child about the importance of saving.

Practicing What I Preach

I hope the above tips help to get you thinking about the different approaches you can take on starting that college savings fund for your child. I want to conclude this article by giving you a little insight to how our family has established college funds for each of our three children (Ages 4, 3, and 18 months).

In the weeks following each of their births (usually after I got the Social Security card in the mail), I went to our local bank and opened up a savings account for each of our children. We have a set amount of money that is pulled from our household operating account each month and automatically transferred into their college savings accounts. In addition, we have taken every dime of Christmas and birthday money that the kids have received and we put it into those savings accounts. With the exception of a $20 “ticket” (his word not mine) that my 4 year old utilized recently to get a tractor – I told you it gets harder as they get older! Surprisingly, their college funds are doing pretty decent. My next step in this plan is to transfer the funds to a 529 savings option once they accumulate some more growth. My goal is to keep contributing to the savings account and making periodic transfers to the 529 savings fund. Once they head off to college, I will drain the 529 account as quickly as possible so that I don’t have to report it on my FAFSA every year (but that is a different article)…

Hope you found this information useful. Happy Saving!