Baby Step 5: College funding for children

Whether you are saving to go college or you’re saving for your child to go, the important principle is to start NOW! You should have already started Baby Step 4 – investing 15% of your income – before saving for college.

In order to have enough money saved for college, you must aim at something. Your assignment is to determine how much per month you should be saving at 12% interest in order to have enough for college. If you save at 12% and inflation is at 4%, then you are moving ahead of inflation at a net of 8% per year!

NEVER save for college using:

1. Insurance
2. Savings bonds (only 5-6% growth)
3. Zero-coupon bonds. (only 6-8% growth)
4. Pre-paid college tuition (only 7% inflation rate)

The best ways to save for college are with Education Savings Account (ESAs) and 529 plans.

Remember, college IS possible without loans!

Take Action!

• Connect with an investing Endorsed Local Provider
• Take care of your own retirement before saving for your child’s college.

Resources:

• Dave's graduation gift bundle
• Investment calculator
• Gearing up for college
• College fund basics