Save Regularly

You may not realize how small amounts invested regularly can really add up with the power of compounding. Saving for a college education is just like planning for any major purchase. One effective strategy for saving for any long-term goal is to save a set amount at set times.

As the charts below show, contributing just $50 a month to your CollegeAdvantage account can add up to a significant amount when your investment returns are compounded over time. Examine your college savings goals with a realistic eye. You may not be able to save enough for all four years of tuition, room and board, but it may be realistic to save enough for the first two years of tuition. If you set realistic goals and work consistently to achieve them, you won’t be tempted to “abandon ship” when other expenses crop up (and let’s face it, they always do!).

One way to set realistic goals is to use a college cost calculator to estimate what college costs will be in the future, and how much you will need to save each month to achieve your goals. Follow the link at left to the college cost calculator. Use the calculator to review your savings goals and model different ways to meet them. The CollegeAdvantage calculator includes room and board in the total cost of college; the cost of college will be less than the total shown if your child is planning on living at home while attending school.

Once you have a set goal in mind, you can start working towards it, a little each month, and watch it grow as your children grow. Extra infusions of cash at tax refund time, birthdays and holidays can make the fund grow even faster.

Automatic saving plans

Most savings plans, including CollegeAdvantage, have easy-to-use programs to save automatically over time. With CollegeAdvantage, you can use the Recurring Electronic Funds Transfer (EFT) plan to have funds automatically transferred from your bank account at regular intervals to your CollegeAdvantage account. You can choose up to two transfers per month from your bank account with only a $25 minimum. The funds can come from a checking or savings account.

Another automatic saving mechanism is payroll deduction. Having your employer withhold a set amount from each paycheck is another excellent way to grow your college savings account. Check with your employer to see if they offer payroll deduction; if not, direct them to the payroll deduction information for employers section for more information on offering payroll deduction for CollegeAdvantage.

NEXT: Reevaluate annually