Saving

Saving for your child's college education can be frustrating. Many parents have responded to well-intentioned advice about starting a systematic savings plan with words along these lines:

"If only I could!"

"With our budget as tight as it is and with all our responsibilities, there's just no way to pull it off."

"I don't think I'm really the kind of person who can save money."

Whenever I hear this kind of justification, I am tempted to reply with one of my favorite quotes. It's from the legendary Supreme Court Justice Louis D. Brandeis, who said:

"Most of the things worth doing in the world had been declared impossible before they were done."

There are many ways to use The College Planner. We have some ideas that you may be useful for you. Look for some of these ideas in The College Planner News, a weekly publication that is Free on this website.

Many parents are not really sure how much they should save on a monthly basis. Here is a simple way to get a good handle on what you might need each month:

Get a good estimate on what the cost of college is, this year. For this example lets say it costs $7,000 per year (a really good buy in today's cost for college). Then determine how many years you left to save (we'll use 5 years for our example). Use the following formula:

$7,000 X 1.10 X 1.10 X 1.10 X 1.10 X 1.10 = $11, 274

Or, if you have a financial calculator you can do present value times percentage each year and find the future value.

If you are going to pay the entire college cost yourself, you will need to save:

$11,274 divided by 60 months (5 years) = $188 a month.

Remember, this amount is only for the first year of college. Take this amount times 4 and you will have a rough estimate of the four-year cost. Don't forget the effects of education inflation. Education inflation will increase your cost by anywhere from 8% to 12% each year.

Of course we haven't considered the growth of the savings while it is being saved, but this will give you a rough idea of how much you will need to save in order to pay for that necessary college education.

As you can see, the earlier you begin, the easier it will be on your budget. Even if you can't save the entire amount that will be required, any amount you can save, on a regular basis is far better than nothing. And guess what? Most parents are not able to come up the entire amount. However, whatever you save will reduce the amount you will have to take out in loans. There are many strategies to saving. Some of these are:

-Carefully review your monthly spending habits. If you can save $25.00 per month it is better than nothing.
-Look at the cost of your car. Can you buy a pre-owned and put the difference in payments into a college saving account?
-Look at what you spend on vacations each year. $100 or $200 saved each year here could really add up.
-Increase your savings by having a direct deposit made from your paycheck. Usually if you don't see it, you won't miss it.

These are just a few ideas to get you thinking. If you really work at it you'll be surprised with the amount you'll come up with each month. Even a few dollars a month can be put towards your child's college education savings plan.

To insure that you are up to date on saving ideas and other information that could affect your ability to make a college education possible make sure you subscribe to The College Planner Digest.