Saving for Your 5 year Olds College Career

Portrait of a child holding books and an apple

Your child may just be beginning their school career when they’re still excited about their teachers and learning, and you’re still trying to grasp that they’re already at this stage!

Not to scare you, but there will come a day in the very near future where you’ll be saying the exact same thing as they walk across that stage and grab their diploma. That’s why it is so important to start prioritizing their future education now, rather than later. If you’re already in the “later” stage, then this is a great article to check out for parents and students alike.

According to Forbes, the average amount a college student spends on tuition a year is $28,000. Student debt continues to rise and currently, according to the National Center for Education Statistics, it’s more than $26,000 for those between 18 and 24 receiving a 4-year college degree.

You may think, “Start small, if I just save a $1 a day, then surely that will give them a good start!” And you’re right, that will give them a start, but only for about a semester, if that. A dollar a day for 13 years totals to $4,745. Sadly, that’s not enough to completely cover attendance for four years.

 

So, now what do you do?

  1. Start small.Just because $1 a day is not enough to send them to college, it is a START. So, start putting that extra cash back specifically for that purpose.
  1. Start a savings account for your child.This will not only help them understand the importance of saving, it will give them a sense of pride and ownership knowing that they have something that’s theirs (even though they can’t touch it yet!).
  1. Jumpstart their savings habit.Whenever they get any money, whether gifted or earned, teach them to save a certain percentage of it. Then, they can have the rest to spend on something they really want. They may even surprise you and tell you they want to save all of it so they can purchase a bigger item later.
  1. Set savings goals as a part of your budget.Have you started a monthly budget?Here’s why you need one!  Set goals for each of your different savings ventures. Assign money to your vacation, retirement, emergency funds, and create a goal for your child’s secondary education.
  2. Open a CD in their name.Once you’ve saved up at least $1,000, then you might consider opening a CD in their name. Generally, this longer-term account has a higher interest rate than a normal savings account. It may not accumulate to a lot, but it will help you keep that money secure and help it gain a little more interest as the years go by. When your term is up, you might consider adding more of your savings into it or starting another CD, depending on interest rates. You can find out more about First Kentucky CDs here.
  3. Encourage your kids to apply themselves in school.It’s never too early to encourage your kids to do their best in school. That way, once they reach high school, they’ll be more likely to keep up the good work. The more A’s they receive, the more money they can possibly acquire in scholarships. If your student graduates from a Kentucky high school, then they are eligible for KEES scholarship money. Learn more about this program.

 

Don’t let the cost of college overwhelm you as there are many factors that will change between now and when they graduate high school. But, it’s best to start preparing and be able to give them a boost when that day comes.