The average college student attending a public university can pay nearly $16,000 per year. Private universities cost in excess of $36,000 a year. Multiply those amounts by four years to see how expensive earning a college degree can be. Here are three ways to budget for college each month, to help fund your child’s future education.
1. Make saving for college a fixed monthly expense.
Like food and utilities, paying for college should be part of your monthly budget so that it’s a priority instead of an afterthought.
First, calculate how much you would need to save each month by using a handy college savings calculator. If the amount you need to save is too high for your budget, save what you can afford and start there. Some students receive financial aid and scholarships, so you may not have to use every penny saved for college. However, it’s good to be in the habit of putting money aside, whether you can afford to save $5 or $500 a month.
One way to assure that you’re setting aside an adequate amount for your child’s college education is to have a save-for-college solution, such as The Gerber Life College Plan1. It’s an endowment policy with an adult whole life insurance benefit that offers an easy way to routinely save by making a fixed, monthly payment that you select based on your budget. It also offers growth without stock-market risk, has cash value and a guaranteed payout upon maturity. You select the maturity date, between 10 and 20 years.
2. Reduce household expenses.
Which “luxuries” can you live without?
Re-evaluate all of your monthly expenses and then cut, cut cut. For example, some families decide to cancel cable TV and opt for a movie subscription instead. The savings can add up to $40 a month by making this single switch.
Eat at home more often. By reducing your take-out expenses, including coffee, you could save dozens of dollars every month.
Buy second-hand items. Consignment and thrift stores brim with gently used clothing, furniture and housewares. You can save money by shopping at second-hand stores instead of, or before, hitting the mall.
Refrain from buying the latest fad, and impulse buying. Before opening your wallet, remember to ask yourself, “Do I really need this?”
Shop for cheaper auto and homeowner’s insurance rates. You could save hundreds by switching insurance companies. Divide the savings by 12 months, and you’ll know how much extra cash there would be to add each month into the save-for-college fund.
No matter which budget items you cut, be sure to place the amount saved into the college fund. Don’t spend the money you save on other things.
3. Get an additional job.
Despite the still-tight job market, there is work out there. Put your thinking cap back on and be creative. Your solutions may surprise you.
Finding an additional source of income will enable you to make more money each month, which in turn enables you to keep saving for your child’s college education. Work part-time at a local shop, or sell your handcrafted items online. As your extra monthly income grows, your college fund grows, and with minimal sacrifice.
1 Policy Form ICC09-PIE
Policy Form Series PIE-09