Student debt is at an all time high. According to Forbes there are 45 million individuals in the US who owe $1.6 trillion in student debt. Crazy, right?
In our article on how to save money, for we gave you a step by step breakdown on how you can save for any of your goals and then use that money to invest wisely. This time we will get a bit more specific about saving money for college with some methods of saving money and money saving hacks. Reducing your student loan debt allows you to be financially secure at an earlier age, giving you the freedom to live how you want.
Saving money for college
Let’s not waste time
Figure out how much you need to save with a money saving plan
Before you can even begin, set aside some time to figuring out how much you will need to save for college. Of course, you can’t perfectly predict but having a general idea of what you will owe allows you to plan accordingly. For all of your time at college, the College Board says it costs, on average:
- $6,880 for a public, in-state two year college
- $37,640 for a public, in-state four year college
- $95,560 for a public, out-of-state four year college
- and $129,640 for a four year private college
It very much depends on where the college is located and the type of college. Have an honest talk as a family and start planning before you move forward.
The next step is to then look at what type of account suits you best. There are numerous types of savings and investment accounts that you can put your money into that have tax and financial advantages.
Let’s dig deeper...
529 Savings Plan
A 529 Savings Plan is a tax-advantaged savings plan that encourages families to save for future education costs. The earnings in a 529 account are exempt from state and federal income taxes provided the money is used towards educational benefit.
Custodial Account
A custodial account, which can also be called a Uniform Gift to Minor’s Act (UGMA) or Uniform Transfer to Minors Act (UTMA), is a savings and investment account an adult controls for a minor until they reach the age of majority (which is 18 or 21 depending on the state you live in).
To learn more about the advantages and disadvantages of these two options, check out this article here: How Does a 529 Differ from a Custodial Account?.
Tips and Tricks
At this point, you have hopefully drawn out a plan of how much you need to save and after evaluating the savings and investment options, you have made a choice. Now it’s time to make it easier on yourself with some money saving tips and tricks.
Apply for scholarships and grants
Taking the time to apply scholarships. We at Loved, know every child is capable of something great and we aren’t the only ones that think that. Take a shot at applying for scholarships. There are hundreds if not thousands online that you can apply for. The money adds up and helps reduce that burden.
Side Hustles
Making money on the side has never been easier and with the internet, the world is connected providing many opportunities to make money. In the click of a few buttons, you can setup a website selling t-shirts. You can take surveys, make YouTube videos, write articles all in your free time. And it doesn't have to be on the internet either! Mow lawns, clean dishes or deliver newspapers. Whatever it may be, unleash your inner entrepreneur and try it out!
Spending smarter
Students focused on getting to college have little time to work. Those that do work are at an advantage financially but what is more important is what you do with the money you have. Make it easy to save by spending your money on what really matters and choose wisely. Spending a little less here and there can really add up.
Add this point, you’re as ready as can be to start saving for college. You know why saving money is important, you have drawn out a plan, settled on a type of account and you are armed with the knowledge to shorten the process.
At Loved, we Offer a Custodial option and would be delighted to guide you on your path. With fee-free investing, it makes it easier to build wealth and however small, it could add up faster than you think.
Our educational platform ensures you make more informed investing decisions and increase the odds of success.
We wish you luck!
