Saving for College


Graduation celebrations are all around us. I think this is a wonderful time to think about what college savings means in your life and for your family.

Find your “why”

As exciting as college can be, the financial burden is often high. So take some time now to think about your motivations. Are you saving for your own education, or for a child or grandchild? What are your long-term goals (for yourself or others) and how does college fit in? These questions may seem obvious, but thinking about them ahead of time will help you motivate yourself as well as choose the right college and field of study.

How much time do you have?

Saving for the future begins with the time horizon, which is the amount of time you have to save. Over this period of time, you’ll be adding to your savings, but that money should also be working as hard as you are by earning interest on what you put in.

Your time horizon can help you determine what approach you should take to investing. Do you want to be conservative, moderate, or aggressive in your investments? For example, if you’re saving for your 5-year-old to go to college, you can be more aggressive with your investments than if you were saving for a 15-year-old to go to college.

How does saving fit into your plan to pay for college?

Paying for college entirely with savings would be great, but the reality is that most people use a combination of sources to pay for college, including savings, private student loans, federal student loans, scholarships, and grants. There are lots of options and you can potentially avoid a lot of debt through a combination of other sources.

Now, how are you going to make it happen?

Even if your priority is saving for college, you’ll always have competing financial needs, including an emergency fund, expenses, and other goals. So now you need to figure out how your budget can support your priorities.

  1. Create a budget and determine how much you can set aside consistently
  2. Decide which type of account you want to save in. A few options are 529 accounts (Children’s Savings Accounts), Roth (retirement), or regular savings. Each option has strengths and weaknesses.
  3. Save, monitor, and evaluate your progress regularly.

For a deeper dive into planning for college, check out these resources:

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