How Much to Save for a Kid’s College Education

Contents

1. Figure out what kind of education you’re saving for
2. Estimate how much college will cost in the future
3. Choose where to stash your savings
4. Stressed about affording it? There’s hope
5. Saving for your child’s college is up to you
6. Remember—scholarships exist to help

They say it’s never too early to start saving for your kid’s college—but if you didn’t start when they were little, the pressure kicks in as they hit middle and high school.

You’ve probably handled expenses like school activities, sports, and summer camps, but have you planned for their higher education? And if so, how did you decide how much to save?

Figure out what kind of education you’re saving for

As a mom of five, saving for college feels like chasing a moving target. Tuition keeps climbing, and loan interest rates seem to outpace the actual costs. My youngest is almost two—I can’t even picture what yearly tuition will look like when he’s in college—and I know other parents feel the same.

When I sat down to calculate how much to save each month for my kids’ college funds, the first question was: What exactly are we saving for? A local community college? A state university? A private school?

How many years do you want to cover—two, three, or all four? If your child goes for a master’s degree, will you help with that too? Answering these questions early means you can have real conversations with your kids as college gets closer.

Once you nail down the type of school and how many years you’re saving for, you can start crunching numbers and planning your next steps.

Estimate how much college will cost in the future

After picking the school type and how long you’ll pay, the next step is estimating the cost. If your child was just born, college in 18 years won’t look the same as it does today.

Or maybe you’re starting to save when your kid’s older, so costs might be closer to today’s prices. Either way, you’ll need to project the future sticker price. You can use a future value calculator or check estimates on sites like Mefa.Org.

For example, say you’re saving for four years at a state college, and your child starts in 2040. Plugging that year into a calculator shows the total cost could be around $160,100 (in future dollars) for all four years.

Now that you’ve got a ballpark number, you can work backward to see how much to save.

Using a present value calculator (or talking to a financial advisor), $160,100 in today’s dollars is roughly $93,000. Breaking that down over 18 years (or however many you have left) and then dividing by 12 months, you’d need to save about $430 a month.

Once you know your target, check your budget to see if you can hit that full amount or start smaller. If it’s less, just know you might need to tighten your budget later or find other ways to cover costs.

Choose where to stash your savings

One perk of saving for college? If you use a 529 account, you might get a state tax break. A 529 is a special education savings account where the money grows tax-free, as long as it’s used for qualified education expenses (the IRS has the fine print on what counts).

Working with a financial advisor or picking smart investments within the 529 can lower the amount you need to save monthly since the money grows over time. This works best if you’ve got plenty of years before college.

Stressed about affording it? There’s hope

What you need to save and what you can save are two different things. If the full monthly amount feels impossible right now, here’s some good news:

• If you start early, your income will likely rise over time, letting you save more later.
• Starting early also gives your money more time to grow through investing.
• You’ll have different expenses once your kids are in college, freeing up cash flow.
• The sticker price isn’t always the actual price (more on net price here).

Don’t stress if you can’t save as much as you’d like right now—things change!

Saving for your child’s college is up to you

How much you save—and what you can afford—is a personal choice. It comes down to your family’s priorities and goals. Every dollar should go toward what matters most to you.

We can’t predict the future, but with some planning, you’ll feel more prepared. Deciding early what you’re willing to pay for and being upfront with your kids about finances will ease stress and keep everyone on the same page.

Remember—scholarships exist to help

You can help your student cut costs by exploring scholarships. Check out Appily’s scholarship database—we’ve got millions of dollars in vetted, legit scholarships (no scams here—yes, that’s another thing to worry about).