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How to Save for College: One family's journey


Simple steps can help to pay for college
Even pennies add up.

“Congratulations on your baby! Remember, they grow so fast!”


So many people said this to me. After the initial afterglow of birth comes the day to day raising of each precious baby, and yes, those days pass quickly. Before I knew it, they entered high school, and we had to figure out college or post-high school education. Eighteen years can pass in the blink of an eye. Unfortunately, the cost of college continues to climb ever faster.


In approximately 220 months after birth, many children will enter college or start on a post-secondary education degree of some type. Only 220 months… with the average cost of college currently around $30,000 a year, you have to save $545 per month per child. Not really; it is about $730 per month because college costs are rising faster than most investments. Aren’t I full of hopeful information? When my kids were little, we did not know how to save for their future plans.


My husband and I made many mistakes. Over the next few weeks, I hope to share some of what we learned and encourage you that hope is not lost. Each Friday, we will explore finances, and I pray you will ask me questions and engage others in what you learn.


As a mom of three adult children, I made many financial mistakes trying to save for their future. One important thing I learned was how much you save for college is important, but how you save it will impact financial aid in the future.


There are many different “vehicles” to build college money. Some are tax-advantaged, meaning you don’t pay taxes on the money if it is used for educational purposes. Unfortunately, if your student chooses not to go to school and wants to use the money for other purposes, there will be taxes and penalties. Other “vehicles” are not tax-advantaged, meaning they are taxed when used, no matter how you spend the money.


One of the easiest ways to start is by opening a plain savings account at a bank in the child’s name. You will have control for a while, but it is in their name, so when they turn eighteen, they can do whatever they want with the money. It is at a bank earning very little interest, which means you are actually losing ground on saving for college. We put $10 a month into a savings account for each child. This account was what we used to buy dorm supplies and computers, pay the initial deposit to attend, etc.


Another easy way to save is by buying savings bonds. These bonds come with many restrictions and rules. They do not grow as fast as many investments but usually have better interest rates than savings accounts. Each bond has a maturity date. This means that if you use them before that date, you will not receive the full value of the investment.


As you look to the future, planning is key to success. The website www.saveandinvest.org has a wonderful chart summarizing your choices. On their website is a good pamphlet called “Smart Savings for College—Buy Better Degrees,” which you can download in a PDF format.


Next week, we will continue this journey of missteps by looking at Coverdell Accounts. Don’t start panicking over all the choices. Please stick with me even if you haven’t started yet; I also have some helpful hints for you. We will wander down this path slowly; we want to savor every minute because they grow up too fast.



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Hi, thanks for stopping by! 

Jennifer Wake is an Army wife, mother of 3 grown children, PWOC board member, teacher, trainer and women’s speaker and writer. 

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