How to Save Money for Your Kids’ College Funds

12-05-2015 | Ramona |

College is expensive.

Everybody knows this. And, of course, every would-be parent believes that, as soon as they find out that a baby is on the way, they’ll open up a college savings account and contribute to it regularly so that, by the time that baby is ready to matriculate, there will be enough money so that child won’t have to worry about loans or massive amounts of debt to help fund their education.

The truth is that, like college, life is expensive.

Raising children is particularly expensive. According to CNN, it will cost almost two hundred and fifty thousand dollars to raise a child who was born in 2013.

That, on top of funding at least four years at a university? How on earth are you going to find all of that money?

Reduce Your Overhead

The first place to find more money is to look at what you’re already spending and try to find a way to reduce it.

There’s simple stuff, like skipping the coffee shop latte in favor of the one you make yourself at home. Then there are the more complicated, advanced and creative methods of saving.

There are tons of ways to save money around the house and to live a frugal lifestyle. There are lots of ways to save on energy, the amount of money you spend on groceries, clothes, etc.

The trick is to find ways to save money that don’t make you feel like you’re living on a shoestring.

Saving the Old Fashioned Way

It’s a good idea to put a little bit of money aside and into a savings account regularly.

Believe it or not, if you can find an account with a good compound interest rate, even $5 a week is better than nothing.

Even without interest, $10 a week will save you $520 a year. By the time your child is ready to head off to school, you’ll have around $9360. That’s not a lot, we know, but it’s better than nothing!

Saving the Modern Way

The real trick to saving is to find a way to get your money to make money.

So, don’t settle for whatever interest rate your current bank offers on standard savings accounts.

Spend some time searching for accounts that offer more than today’s paltry 0.01%.

You can usually find much higher rates on internet-based savings accounts (these institutions have much lower overhead so can offer better rates to their customers).

You should also be rolling your savings into other investments like CDs, money market accounts, etc.

Sit down with a financial advisor at your bank or with a certified financial planner to look for ways to take that $10 a week (remember, this is the minimum amount you should be saving per child) and turn it into a lot more!

College Specific Savings Accounts

One of the best things you can do, especially if you are relatively certain about where your kids will go to school, is to set up a 529 College Savings plan.

A 529 plan is sort of like an IRA but instead of saving for retirement, you’re saving for college. 529 plans have tax benefits and are fairly flexible.

They can also be transferred to other states if your child decides to go to an out of state school. There are also plans for private schools.

Financial Aid

Encourage your kids to study hard, get good grades and really participate in their educations and schools.

The better the grades the better your child’s chances of getting scholarships and grants for school.

There are a lot of different scholarships and grants out there.

Tracking them down will take time but they are a great way to offset your out of pocket costs for tuition and room and board expenses.


It’s true, most people would rather avoid having to take out loans.

It is also true that loans are an inevitability for most future students.

The real trick isn’t so much finding a way to avoid them altogether (though that would be great). It’s making sure that the loans you do take out are good loans that will not bury your kids financially for decades after they’re done with school.

Lots of people will get federal loans. Unfortunately, according to Simple Tuition, not everybody qualifies for federally funded student loans.

If you do have to work with a private lender, make sure you do your research. Understanding how interest rates work, and which lenders are the most reputable, etc.

There are, of course, other ways to reduce the cost of your children’s educations.

Starting at community college, trade schools, etc–there are lots of ways to get higher degrees without having to pay for them until they retire.

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Recent Comments

  • Maria "Mery" Teresa

    September 9, 2015 at 7:30 pm

    It is amazing how much certain universities cost! I used to pay about $2000 /year, college fees and books included, I studied in Italy, but I heard there are countries where college fees are even lower! Amazing how things change from country to country.

  • Jasmine2015

    September 30, 2015 at 9:55 pm

    I have never heard of a 529 plan. I wish my parents had the means to save up for all my siblings as far as college is concerned. I have also done a little digging around as far as how much it cost to raise a child for 18 years and I got around $200,000-240,000. Now that this figure is updated I can see the trend just might continue to go up as far as how expensive kids will be.

  • Candy_gurl

    November 10, 2015 at 3:46 pm

    Holy moly! I don’t even have a boyfriend, but after reading that CNN article you linked to, I’m thinking about saving money for a kid starting right now!
    Joking aside, if I ever have a kid and had to do something about his/her’s college funds, I’d do my best to stay away from loans. Being in debt is nothing but bad news, IMHO!

  • JustAnotherSoccerMom

    December 29, 2015 at 7:59 pm

    I keep hoping my kids will earn a scholarship one day, but until then, I’m saving money the old fashioned way! I hop it’ll be enough, for when the time comes, but whatever the case, every little bit helps 🙂

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