Baby Step 5
College funding for children
By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.
In order to have enough money saved for college, you need to have a goal. 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:
- Savings bonds (only 5-6% growth)
- Zero-coupon bonds. (only 6-8% growth)
- Pre-paid college tuition (only 7% inflation rate)
The best way to save for college is with Education Savings Accounts (ESAs) and 529 plans. Remember, college is possible without loans!
Financial Peace University Online!
Dave’s Life-Changing class now Online to fit your busy schedule! Learn More
Dave's School Curriculum
Empowering students to make sound financial decisions for life. Available for both Highschool and Homeschool More Info
See Dave Live!
The largest, most exciting event on personal finance in the nation! Find Tickets