After the birth of your first child, it’s not long before you start looking forward to the many landmark moments that come with raising a family: baby’s first steps, first day of school, first date, first night out after 10 p.m. unsupervised. At the top of this list is undoubtedly the day they go off to college. Many families would love to help cover their child’s college tuition, however saving for college is a goal that requires serious commitment over many years. Below are a few simple steps to get you started.

Start Saving for College Now

The younger your child is when you start saving, the more bearable this extra financial burden will be. Many families decide to contribute to a college fund significantly later in the child’s development, and while some savings is always better than none, this will severely limit how much help you can really be when the time comes to enroll. If you dream of gifting your baby with a full ride, make the decision to contribute to a college fund immediately.


Know Your Limits

If your finances tell you that covering the full cost of your child’s tuition is out of the question, that’s okay. In fact, having enough self-awareness to know your financial limits will help you devise a sound savings strategy your child will appreciate.

The outlook for college tuition rates is bleak. By the time your baby is ready to enroll, expect rates to be as high as $130,000 for in-state schools and $235,000 for a private institution. If your plan is to cover 100 percent of the tuition, you can’t start saving soon enough. Most calculators, such as the one provided by, recommend saving $450–$500 dollars a month. For many families, that goal simply isn’t realistic.

There is no shame in developing a detailed plan for splitting tuition with your child when the time comes. By committing to half of the total tuition, or even a third, you can still ensure that your child, with the help of scholarships and a low-interest loan, can still get a quality education without a heavy financial toll.

Another sound strategy is to save around strict parameters. For example, by committing to saving for a public tuition, and not private, you can guarantee a certain “baseline” education for your child. This way, if your child has his or her heart set on Harvard or Yale, you can hold them responsible for picking up the difference.

Assuming you plan on contributing 50 percent of the costs for four years at a public university until their 18th birthday, expect to save about $96 a month, or $1,151 per year. For most families, that sounds much more reasonable than $500 a month.


Know Your State

You don’t have to take on this task on your own. Depending on where you live, you might be eligible to take part in a state-sponsored savings plan designed to cover future tuition at today’s costs.

Called 529 savings plans, all 50 states now have some way for households to start saving for college — and each state offers their own advantages to investors, including both federal and, in some cases, state tax breaks.

Despite the minor variations state to state, 529 saving plans can essentially be boiled down into two types: prepaid and regular plans.

Prepaid vs. Regular 529 Savings Plans

Prepaid plans are exactly what they sound like: you can “prepay” to cover your child’s tuition for an in-state college — at today’s tuition rates. With tuition costs rapidly rising, this can translate to thousands of dollars in savings. Some prepaid plans can also cover tuition for out-of-state schools, as well, but usually with a penalty. Less common than the regular savings plan, there are only 18 active prepaid plans in the country. Of these, only nine are currently accepting applicants.

Regular savings plans offer many of the same benefits as prepaid plans, but offer the investor more flexibility. For example, while prepaid plans only cover tuition costs, savings plans can be used to pay for extra fees, school supplies and equipment, computers, Internet access, and room and board. Similar in structure to an IRA or 401(k), you will be able to choose which mutual funds to invest in, which will increase or decrease in value depending on their performance. If you’re planning on going into College soon, you will need to have a reliable ISP especially if you’re into your gaming! There are various cheap Internet plans out there on the market, perfect for the college student!

Both options are good, and each one should be researched if your family is making a commitment to your child’s educational future.


Maintain Your 401(k) and IRA

Children are, of course, the most important thing in our lives, but we can’t help them if we can’t take care of ourselves first. When saving for college, we must not lose sight of this. An adult can always tap their accumulated assets to help their child, but it doesn’t work the other way around. This is why a 529 Savings Plan should not replace any 401(k), IRA, or other retirement accounts you have already contributed to. Not only will this provide you with additional tax benefits, you will also have the option to borrow against these accounts later if your child needs additional financial help for school.

Like all financial plans, the decision to start saving for school begins one dollar at a time. It’s a daunting task that cannot be accomplished overnight, but regardless of your budget, it can be done. All it takes is a little perseverance, willpower, and a little faith in your financial plan.