As parents we want the best for our children and for many of us that typically involves them getting an education after high school. Making the decision to help your child pursue a higher education is the easy part. The hard part is finding a way to save enough money to help them actually go. Tuition rates continue to rise and in addition to room and board, you also have to factor in books, food, gas (to come home on weekends to do laundry, get a home cooked meal, and lots of hugs from you) and social extras. It is very overwhelming to a parent, especially a single parent and or a family with only one income, to achieve saving enough money for 4-5 years of undergraduate work. So how do you plan ahead?
I have learned a lot from parents over the years and found some secrets and creative ways you can save that I’d like to pass on to you.
- Your child can get a job and you can match their earnings If a child is under the age of 18, The Fair Labor Standards Act (FLSA) sets the general minimum age of 14 for a child to legally be employed in the United States. The FLSA also limits the number of hours worked by minors under the age of 16. You will have to check www.dol.gov for more information. If your child starts working at a young age, they can start saving for college on their own and or with your assistance. I know some parents that MATCH what their child makes working. If the child contributes $300 a month, then the parent contributes $300 a month.
- Your child can apply for student loans. This is a popular choice on how to handle the cost of college and it will save you and them from paying out of pocket upfront. Loans are not very fun to pay off, especially when they accumulate over the years and when a ton of interest is added before they even graduate, but the hope is that once they graduate, they can start slowly paying them off one month at a time. There are also ways you can successfully pay off your student loans by way of income base repayment programs and non-profit work. If your child becomes a teacher, there are also perks to pay off student loans quicker than other professions.
- You can open a 529 College Savings Plan. You can save for your child’s education TAX-FREE and you choose from a variety of investment options (similar to a 401k) as soon as they are born. The account legally belongs to the parent, not the child. And if your child decides they are not going to attend college then the parent can change the beneficiary. Funds can only be pulled tax free for qualified education expenses (tuition, books, room and board, etc). If any of the money is spent on other items, it might be subject to income tax. Other restrictions may include how much money you can save each year and how many times you can add to the account each year.
- Open a savings, money market, or CD (certificate of deposit) account. I suggest a money market account over a savings account so you can benefit from higher interest. Money markets will also allow you to remove money at any time without penalty. A CD can offer a high interest rate that doesn’t change like a money market would over the course of the term, however, if you have to pull money out of your CD, you may be subject to withdraw penalties. Some money markets and CDs (and even some savings accounts) require a minimum balance to open and to maintain the account. If you get money taken out via direct deposit for these types of accounts, you will not have to take the money out yourself. What you don’t see, you are less likely to spend!
- Save a little each day. Remember the old saying of put money away for a rainy day? Some people I know hide money in a home safe or even under the mattress! Here is a fun system I learned to save money for college or even a family vacation. If you put away $1 on the first week, $2 on the second week, $3 on the third, etc until you put $52 on the last week of the year, you will save $1378 a year! And if you double what you put in each week, $104 being the MOST you put in for a one week period, you can save $2,756 a year!!!
I plan to do a combination of the above for our daughter. I am first going to start by having a visual display as a tool to educate her on the importance of college and saving money. That being said, I recently came across a beautiful shop called “Haven’s Place.” Now I have to admit I was first attracted to the shop because of the name, because my daughter’s name is Haven. I started following the shop on Instagram and was linked to their Easy shop and I fell in love with their products! I am a huge advocate of shopping small an supporting small businesses. What’s even better is that when I started working with the shop to provide you with an amazing giveaway opportunity, I found out that the shop owner’s daughter’s name is also Haven.
The best part of Haven’s Place is that the shop owner will customize any of her items just for you! Whether it be color, font, or what the item says, she will personalize whatever you buy! I know I wanted something to hang in Haven’s room to show her from a young age how important college is and how important savings is for college so I asked the shop owner, based on her already stunning designs, to help create a visual way for Haven to “save for college.” She was open to the way the board was shaped, what it said, what colors and fonts I preferred, and then created and sent me the most amazing product! I immediately hung it up in Haven’s room above her bookcase. I explained to her what it was for and even had her add some cash to it herself so she could feel invested in it!
Whether you want a way to save for your child’s education or a family vacation, please check out Haven’s Place on Instagram @havensplace and also on Etsy by following this link https://www.etsy.com/shop/Havensplace?ga_order=most_relevant&ga_search_type=all&ga_view_type=gallery&ga_search_query=havensplace&ref=sc_gallery_1 She also makes plenty of other board signs for birthdays, laundry rooms, lost and found, bathrooms, holidays, and family celebrations.
Make sure you are following @theparentologist on Instagram because I am partnering with Haven’s Place for a giveaway where everyone is a winner if you enter!! Details tomorrow on Instagram!