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How to Save Money for College: A 101 Guide for New Parents

Key Takeaways

  • A good time to start saving for college is when your child goes off to kindergarten and you no longer have to pay for childcare.
  • Only 44% of parents start saving for their kid’s college education before their child’s 11th birthday.
  • You can save for college using a 529 plan, traditional savings account, custodial account, and/or a Roth IRA.

By Stephen Sellner | Citizens Bank Staff

You’re sitting at the kitchen table, watching your child eat their apple sauce while simultaneously firing off your last email on a work-from-home Friday. That’s when you hear it.


They did it — they said their first word! It’s at this moment that you realize your little one won’t be little forever. That gets you thinking about the future.

Oh no, college will be here before we know it. I need to start saving. Am I already too far behind? What do I do? Someone help!

Don’t fret. Here are the answers to some frequently asked questions about saving for college.

When’s a good time to start saving money for college?

Here’s the cliché answer: as early as possible!

OK, now that we’ve gotten that out of the way, let’s get realistic. A good time to start saving for college is when your child goes off to kindergarten. Before that, you may have been paying for childcare, and that expense is set to come off the books now that your child’s babysitter is their kindergarten teacher. What if you allocate a portion — or all — of that childcare money to your child’s college fund?

Only you can decide how much of that childcare money goes to the college fund. But if you could squeeze the cost into your budget before, could you continue making that financial sacrifice, this time with a different goal in mind? Childcare, as you know, isn’t cheap. Even allocating half of the money you used to spend monthly on that expense would be a great jumping-off point for your child’s college fund.

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Did you know: Only 44% of parents have started saving for their kid’s college education before their child’s 11th birthday.

Source: Citizens Bank Student Lending Survey

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Or, maybe you’d prefer to save less each month but for a longer period of time. Maybe starting on their first birthday? That could be easier for you to fit into your budget.

This leads us back to the cliché answer we started with. The sooner you start, the more time you have for your savings to stack up and, as you’ll learn in the next section, the more opportunity your money has to grow.

What accounts exist to help save money for college?

There are four types of accounts that can help you save for college. They are:

The 529 plan is the most popular way to save for college. A 529 is like any other fund in that your money has potential to grow over time, but here’s the critical difference: any earnings are exempt from federal taxes when it comes time to withdraw, assuming the funds are used for education expenses.

A 529 plan is the most common way to save for your kid’s college … and their dreams of being a music producer one day.

What are some clever ways to save more?

Sure, you’d love to have a higher salary so you could save more money for your child’s education. But if that’s not in the cards, look for some other ways to allocate more money to your college fund without feeling as much of the burn on your budget.

Perhaps you make a rule that any birthday checks your child gets go to their college savings. Or maybe you don’t let your annual Christmas bonus get too comfortable in your checking account by quickly diverting it to the college fund.

These are just thought starters for you to consider. Think about little ways that you can allocate more money to their college savings. This extra money might seem inconsequential when compared to the cost of college, but that money will add up over the course of 10, 15, or 18 years. And don’t forget that there’s the chance for tax-free earnings on that money!

What to remember

Paying for college is certainly a challenge. But you’ve got something on your side that can help: time! Time is your best friend when it comes to saving for college. It provides more opportunity for your money to grow in, say, a 529 plan, and lessens the burden than if you put it off for years.

And remember that you can only do your best! College is expensive, and at the rate tuition prices are rising, the cost is bound to increase considerably by the time your child gets their first acceptance letter. But if you come up with a good plan, you’ll be doing your part to set your child up for a successful future.

Are you ready to get started?

A Citizens Bank Wealth Management Advisor can come up with the best plan for you. Want to learn more? Fill out this simple form to request a call back from an advisor.

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