College Savings Plans

For many of you who plan on attending college or sending your children to college, it is likely that it will be one of the largest expenses you will encounter (next to retiring and buying a house). So it is very important that you save for it.

Step 1 - Decide How Much It Will Cost The first step to preparing to save for college is to decide approximately how much the college education will cost. To do this, you can research a few colleges that you have in mind or ask a financial planner, either one should work.

College tuition never stays the same so you will have to account for rising tuition. Tuition rises at approximately 5% per year so to figure how much it will cost when it is time for you to go to college or send your child to college, you will need to account for this.

Step 2 - Decide What to Invest or Save In Ok, now that you have an idea of how much it will cost, you should start planning your investments and strategy. Although we are not certified financial advisors, below is a table with a few of our recommendations.

As you can see, you can afford to be fairly aggressive at a younger age because there is more time to invest. But as you or your child grows older, you should move more money into bonds or cash to secure your savings.

Step 3 - Wait Once you have taken the proper steps to saving for college, all you need to do is wait and the savings will grow through compounding. If you feel that you may still not have enough for college, try saving a little extra each month and invest it in a mutual fund or something. Periodically adjust your holdings as needed.

The real trick to saving for college is to start early but even if you start late, you can still reach that goal...it might just take a little more saving and investing, though. But we're pretty confident that you can handle it.