How to save for kid’s college while they’re still young

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Do you have a plan to save for kid’s college expenses? Even if your kids are young, now is the time to start thinking about college funds and tuition costs. You don’t have to look far to see that the US is experiencing a student loan crisis. I remember when I started college, I was bombarded with loan offers like crazy. Unlike home loans and car loans, student loans are given without discrimination. Whether or not you have a high probability of finishing college and paying the loans back, you can borrow tens of thousands of dollars. This is standard on college campuses throughout the nation.

When I started college, I made a goal to avoid student loans at all costs. And as I worked, it worked. I never took a student loan, even though I had no financial help from my family. Now that I have kids of my own, I’ve tried to think of ways to save for kid’s college long before they ever set foot on campus. My kids are still young, and we’ve got several years before we’ll need to pony up that tuition bill. But I’ve compiled a list of things we have done so far, as well as things we plan on doing when our kids are older. There are things that you can do now to prepare for when your kids start college.

Retirement first

You may want to jump in and start saving for your child college education the moment they are born. But don’t begin allocating money towards any funds for your kids until you have paid off your own student loans. Once your student loans (or any other non-mortgage loans) are paid off, it’s essential that you are on track for retirement. Are you saving at least 15% of your paycheck for retirement? If not, start today. Your kids can take loans for college, but you can’t for retirement. If you can’t pay for your kid college education, they will figure it out. I promise. I did. Kids do it every day. But if you don’t save for retirement, you’ll just turn yourself into a burden for your kids for later on.

Start early

We didn’t start saving for our eldest’s college fund until he was about four years old. We were too busy paying off my husband’s student loans and dealing with a year-long job loss to throw any money at college savings for our kids. Our youngest, on the other hand, has had regular contributions into their college fund since the day they were born. Guess whose college fund is on track, and whose is behind? Those four years made a big difference. Of course, we are doing our best to play a little catch up with our eldest’s college fund, but it has allowed us to see the power of starting early. Start as soon as you can. When as you get your own finances in order, make it a goal to begin regular contributions for your kids.

Get a 529 Plan

Does your state offer 529 Education Plans? Most do. Each state plan is different, but 529 plans are often tax deductible. You can contribute as much or as little as you’d like. When it comes time for your kids to attend college, they can use those funds for qualified educational expenses. If your kids decide not to attend college, you can transfer the plan to another student in the family. This is a good place to start if you are just beginning to save for kid’s college expenses.

Work towards it together

When you are a parent, you want to give your kids the world. It’s hard to think about your kids taking loans to start their adult life. But the fact of the matter is that you need your kids to buy into the process of saving for college. You shouldn’t take that whole burden on yourself. Most of us can’t take that whole burden by ourselves. Let your kids decide how they’d like to be involved in paying for their own college education. Work together to come up with a plan on how to pay for their college expenses.

Don’t pay 100%

This might sound controversial, but I’m going to go out on a limb and say that you shouldn’t pay 100% of your child’s education costs. We’ve talked about getting your kids to buy-into this process. This is one way to do it. Maybe you only pay 50% of their educational costs. Or maybe you pay for 90%. It doesn’t really matter the percentage, if you are expecting them to pay for a portion of their education, they will feel the pressure to get involved. Not only do you get that buy-in from them, but it also means you need to save less to cover their educational costs. Saving 50% of tuition for a 4-year education is a lot more reasonable than saving 100%.

Make it automatic to save for kid’s college

One of the hardest lessons in life is that anything worth doing, is worth doing consistently. If you want your child to have a healthy college fund when they pack up their stuff and move into a dorm, then the saving needs to happen now, and regularly. Save for kid’s college with an automatic withdrawal from your bank account to your child’s education fund. Even if it is a small amount, a little bit every month will add up over time.

Set your own requirements

Paying for your kid’s college education is a gift from you to your kids. It’s a very kind gift that usually equates to thousands of dollars. You don’t owe this to your kids. Don’t be afraid to set requirements on this gift. Some parents require that their kids keep a certain grade point average. Others require all funds to be paid back within 6 months if their child fails a class. You can choose your requirements, just make sure your child is aware of those requirements ahead of time.

Make them save half of what they earn

Can your child save half of their paycheck or allowance? I have a sister-in-law who makes her kids save half of everything they earn throughout their childhood. Her kids have complained on occasion, but they know that is just what they are expected to do. It doesn’t matter if that money comes from a part-time job, or allowance. They save half of all they earn. Now that her kids have started college, they are beginning to recognize the value of saving that money. Those saved funds have helped her two oldest kids pay for their own tuition and living expenses.

Match savings

Does your child earn money, but spend most of it? Encourage them to save for college by matching everything they put into the bank. If they put in $200, then you put in $200. Set some ground rules (like they can’t pull it out until a certain age), and then encourage them to save consistently.

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Make it a gift

Does grandma or a beloved aunt send your kids birthday money every year? Instead of sending it directly to your child, have them contribute it to their college fund. It may not be a “fun” gift, but it will do much more good for your child in the long run. When you set up a 529 plan, there should be an option to have relatives and friends contribute a financial gift to that fund.

Get a side hustle

If you and your family are living well, but not quite making enough to save for kid’s college, it might be time for a side hustle. Although my husband has a great job that he loves, we can’t save much for our kid’s college education on his income alone. One of the primary reasons I have chosen to pursue work (while being a stay-at-home-mom, thanks to the internet!) is so that I can help save for our kids to attend college. I have taught college courses and worked as a freelance writer to help put away money for our kids. There are so many side hustles that parents can pursue, outside of a 9-5 (or stay-at-home-mom) job. If you start when your kids are young, you don’t necessarily have to earn a ton from your side hustle either. A little bit, put away consistently, will help.

Talk about school selection while they are young

The school your child chooses to attend can make a huge difference in their overall experience and cost. Begin talking about colleges and universities long before the time to make the decision about which school your child will attend. Some kids will get their hearts set on a school, only to realize that it costs way too much. In most cases, it’s beneficial to start at a small two-year junior college and then transfer to a larger 4-year university. State schools will usually be cheaper than private schools. If you talk about school selection early, and often, your child will have time to gather the facts on tuition prices before they choose a school.

Think about scholarships

Who doesn’t want free money? Scholarships are just that, free money. But they don’t come easily. It’s a lot of work for qualify and apply for scholarships. If your kids aren’t planning to apply for college scholarships, they are leaving money on the table. Thankfully, there are a wide variety of scholarships out there. From academic and sports scholarships to need-based scholarships. Your kids may not be able to apply for a lot of scholarships until they are in high school, but the things they do in their younger years could play a role in their ability to get scholarships later.

Saving for kid’s college is a daunting task. But it doesn’t have to be impossible. Starting to plan for your kids college expenses while they are young will give you plenty of time to save. It’ll also give your kids time to get invested in the process.