How Early Should You Start Saving for College?

college fund, save for college

As if new moms and dads didn’t have enough to do adjusting to parenthood and getting through the days and nights caring for their babies, they also need to start thinking about saving for college. And it’s never too soon.

Most financial experts recommend putting money aside for a child’s college tuition as early as possible. That could mean even before the baby is born or soon after you bring her home from the hospital. A good way to do that is to open a state-sponsored 529 plan, which accumulates money for school tax-free and can be claimed as a deduction on your tax return.

That said, if your own finances aren’t in order, then you should hold off on saving for college until you get things under control.

“Yes, it’s important to start saving for college early, but many experts say you need to place equal if not greater importance on your own retirement plans,” writes Anisha Sekar in a piece on when to start saving for college on nerdwallet.com. “After all, there are other options for paying for college, but your only option without any retirement savings is to a) keep working or b) get by on meager social security payments.  College can be paid for with loan programs, scholarships and grants. Retirement cannot.”

Sekar recommends making sure parents are contributing 10 percent of their income to their own 401 (k) plans and can continue to do so if they set up a college savings fund. They should also pay off any credit card and student loan debts and have some kind of savings account in place.

Once all that’s taken care of, then save away for college. If you’re one of the lucky ones who had all the financial I’s dotted and T’s crossed before you even started trying to have kids — but knew you wanted children — then you can even open a college savings fund as soon as you decide to be a parent.

And contribute to it regularly as early as you’re able to. Even if you’re just putting small amounts into the account, it will pay off later — which is important since college tuition is so expensive and has risen astronomically (more than 50 percent) in the last 10 years. So, for example, putting aside $100 a month will get you $48,000 over 18 years at an 8 percent annual return, according to CNN Money, which advises investing in stocks as the best way to save for college.

Don’t worry about saving for all four years if that’s not in the cards, either.

“Federal, state and private grants and loans can bridge the gap between your savings and tuition bills, even if you think you make too much to qualify,” says CNN Money.


So what are you waiting for? That piggy bank is calling your name!

What’s your strategy when it comes to saving for college?