5 Ways to Save for Your Kid's College without a Lot of Money

How to Save for CollegeHow to Save for CollegeBy: Jessica Drew

If you're expecting a baby or have a young child, and have very little extra money, you're not alone. Many young couples have children while they are trying to establish themselves financially.

At the same time, perhaps you or your spouse, close friends or family are suffering from private student loan debt. Many young professionals have variable rate, private student loans that they can barely afford, or cannot afford, to make monthly payments on. You certainly do not want your children to start their professional lives out this way.

Even though you may have very little money, you can start a college fund for your kids with a little planning and a few good ideas, like these:

1. Start early.

The earlier you start, the better. Time is on your side this way. If you begin putting $10 a week away on your child's first birthday, by the time he or she is ready to graduate high school and go to college, you'll have almost a $10,000 nest egg! This strategy will not work nearly as effectively as more years pass. Plus, $10 a week only adds up to about eating out once a month, which you can easily forego.

2. Open a family and friends' college saving account.

Take advantage of all holidays, birthdays and other special occasions. Set up a fund that family and friends can contribute money to in place of a gift. If you have kids and are reading this, then you already know that family and friends will give you way more toys than you could ever want and most will be broken or forgotten about within a month's time. A contribution to a college fund would go much further than the latest and greatest toy ever will.

3. Put your money somewhere it will grow and be safe.

Although the stock market can yield high returns, this investment arena is far too risky for your child's college fund. Choose a high interest bearing savings account or better yet a 529 Plan. Each state offers a 529 Plan, and as long as you use the money for educational purposes, you will not be taxed on your college savings. This can add up to thousands of dollars!

4. Get out of debt.

Make a plan to get out of debt yourself by the time your child enters college. This of course includes credit card debt, but also your home loan. Think about how much extra money you'd have every month if you were able to pay off your house by the time your child goes to college. If you have a traditional 30-year mortgage, you could actually pay it off in 18 years just by putting a hundred dollars extra each month or so to the principle amount owed, but only if you start now.

5. Don't touch the college fund.

As tempting as it may be when you need money for that car repair, do everything else possible before tapping into your child's college fund. It's easy to do, but will set you way back in regard to your savings' goals.

Jessica Drew is a freelance writer and editor who blogs about a variety of money making and finance topics such as
private student loans.

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