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Saving For A Child's Education

A quality education is priceless. It provides your child with a competitive advantage when entering the workplace, and will usually help him or her to obtain a better initial salary and advance faster..

It’s no secret, however, that a college degree is becoming increasingly difficult to afford. Tuition has skyrocketed and there doesn’t appear to be an end in sight. During the next ten years, tuition costs at many institutions may easily double.

It’s in your best interest to develop a well-conceived, disciplined savings plan for college expenses. Your plan could take many forms, but you should anticipate the following:
  • How many children will be attending college?
  • What type of school will they attend?
  • In what year will they begin?
  • How much of the expense are you able to provide?
  • How long will it take for your child to achieve a degree?
Answering these questions when your children are young can help lead you down the path to saving the necessary funds.

Here Are Some Simple Savings Routines You Can Start Today:

  • Pay Yourself First.
    Make savings part of the fixed expenses in your budget, much like your mortgage/rent and utility payments. Set aside money before you pay your bills each month. This way you can begin saving on a regular basis.
  • Use Payroll Deductions.
    Have your employer deposit a portion of your pay directly into your savings account. If you never see it, you probably won’t miss it and it makes saving easier.
  • Save Windfall Income.
    Try saving tax refunds, bonuses, overtime pay and gift money. These are usually larger amounts of money that will make sure your savings grow faster.
  • Start Saving Early.
    Don’t wait until your child reaches high school or even junior high. Put money in a savings account starting the day the child is born. This gives you 18 years to have your savings grow.
Child's Current AgeMonthly Savings Needed to Save $80,000*

Dollar Bank Can Help Ease The Cost of An Education

Ask about a Coverdell Education Savings Account, which is a tax-free way to save for your child’s education expenses. The funds may be used for tuition, room and board, education fees, supplies or equipment for elementary school through college.

Want an even better way to save? Another alternative is our CD Ladder, which can be tailored to meet your savings objective.

A CD Ladder employs the time-tested strategy commonly referred to as “laddering” to spread your total investment among several individual CDs with terms ranging from short (6 to 18 months) to longer (24 to 60 months). This combination of CDs works together to provide higher immediate returns while eliminating the interest rate guesswork from your CD purchase decision.

When planning for your child’s education, you can reinvest the CDs in your ladder so their final maturity dates coincide with your goal date. You’ll have the higher returns you want, FDIC insurance and all of your money when you need it. You can even add money at reinvestment to accelerate your savings. Click here for more details.

Dollar Bank can also provide you with the financing needed to help supplement the funds you have reserved for tuition and other education costs. See us for Stafford, PLUS and home equity loans that can help with college costs. Click here for more details.

College is expensive - but there is help. Talk to a Dollar Bank Representative about saving for your child’s education.

The information presented in this publication is general in nature; it is not our intention to provide specific advice to individuals or a comprehensive discussion of the subject matter. We suggest that you consult with your financial or tax advisor, accountant or attorney to obtain specific advice or comprehensive information.
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