by Emily Hechler 
Congratulations! You’ve been accepted to your dream college! How do you plan to pay for your tuition and other expenses? While this is not the most exciting conversation to have about your upcoming college experience, it’s a reality every college student must face. A better question might be, “How do you plan to save for college?” Whether you’re a parent wanting to help your child financially or a young adult anticipating the start of the semester, saving for college expenses is a must. No matter when you start saving, each dollar saved is a dollar less you’ll have to make up later.
If you are a parent who wants to help cover your child’s college costs, here are some tips to help. First, know that it’s never too early to start saving. If you set aside even $100 a month when your child is born, that money will have ample time to grow. The more you can save for college early on, the larger your return. If you consistently save the same amount, setting the money aside will become part of your lifestyle. I’m not saying that your life will revolve around saving money for your child. Just like any habit, it becomes like second nature over time. Working the $100 a month into your budget and sticking with it will be common practice. You’ll get used to saving the amount each month and not even notice the difference in your day-to-day living.
A tip to keep in mind that that when your child applies for need-based financial aid in the future, they will be eligible for less aid for every dollar over $3,000 in their name. Keeping your child’s money under your name could result in more financial aid. However, your child can rack up $3,000 with a little elbow grease and a few hours of hard work over the summer. If this scenario sounds reasonable to your family, keeping your child’s pre-job savings in your name or theirs won’t make a difference. (Do not keep your child’s job earnings in your account. That will create a lot of unnecessary confusion when you both file your taxes.) There are other exceptions to this including if your income already disqualifies your student from receiving need-based aid.
Speaking of filing your taxes, you can contribute your tax refund to your child’s college savings. This is a great way to set aside some cash every year without needing to make a sacrifice in your everyday life. You can save for college from other opportunities that come with extra cash, such as bonuses from work, overtime pay, and inheritances without necessarily feeling the loss.
When you save for college for your child, you have a variety of savings accounts to choose from. High Yield Online Savings accounts, Certificates of Deposit, and other savings accounts have their pros and cons depending on your savings strategy. A great saving option is a Coverdell Education IRA. This account allows you to contribute up to $2,000 per year tax free! When you open this type of account, your child will be set up as the beneficiary. You can contribute until your child turns 18. Then, your child can withdraw until they are 30 years old. They can use the funds on high school or college expenses.
Just because you are saving for your child’s college doesn’t mean that they should get off the hook too easily. If you can afford to pay for your child’s college education, you must be pretty good at saving. Helping your high school grads save money, even if they don’t need it for college, will only benefit them in the future.
High school grads, if you’re still unsure about whether you want to attend college next year, learning financial management tips still has great value for your next step in life. Creating a budget will help you get a realistic look at your finances, and possibly a reality check if you currently don’t manage your finances well. Even if you don’t have a lot of expenses yet, following a budget now will prepare you for when more expenses come your way. Rent, car expenses, cell phone bills, and fun money add up quickly if you don’t keep an eye on how much you spend. If you don’t know how to make a budget, Alltru has resources to help you.
Another key element to financial management for high school grads is building your credit score. Paying your bills in full on time will help establish and increase your credit score. Opening a credit card is another option. I recommend that you have your budget in place before getting a credit card or you can easily overspend and end up in a pile of debt. After you create your budget, keep your spending to under 30% of the credit card’s total limit.
Automatic saving is a great way to save for college without feeling the consequences of less money to spend. With mobile and online banking, you can set a portion of your paycheck to automatically transfer to your savings account instead of staying in your checking account. To spend it, you’ll have to pause and move money out of your savings account into your spending account which will give you another opportunity to consider whether it’s worth it.
If you are a frequent shopper, a RollUp Savings account from Alltru can help you save effortlessly. Every time you make a purchase, we’ll round your total up to the next dollar. Instead of spending that extra amount, the money will automatically transfer to your RollUp Savings account. With both this savings account and a traditional savings account, the money that sits in the account will grow interest. With Alltru, you’ll be rewarded with savings while you’re spending.
If you’ve decided college is the next right step, you probably know by now that going to college isn’t cheap. Taking the right actions to prep for your college experience will help you survive your first year both personally and financially.
Opening a checking account allows you to manage your money while at school. You can make transfers online and with the mobile app if you aren’t near a branch. When you open a checking account, you’ll get a debit card so you can make cash-free purchases. Plus, if you have a part-time job while in college, the money can be directly deposited into the account instead of being cashed out.
If you’re living in a dorm or renting an apartment rather than living with your parents, you’ll find that living expenses quickly add up. After you open a checking account, you’ll be eligible to open a High Yield Online Savings account. Saving money into this type of account will grow your funds because of our competitive interest rate. Whenever you have margin in your budget, move money into this account. Your future self with thank you.
A common way to pay for the remaining expenses is through a student loan. However, the more money you borrow, the more money you’ll have to pay back. Student loans have interest too. Be cautious about how much you borrow. Consider using your savings and paycheck to pay for your expenses first.
While college is an expensive investment, the friendships, experience, and knowledge you’ll gain along the way will be worth it. With these tips in mind, saving for college doesn’t have to be intimidating. Making the right money moves now will help make your expenses easier to manage. Whatever your next step is, Alltru can help you get the right resources in your hands.
