September is underway, and it is worth noting that it is National College Savings Month. As you might imagine, back-to-school is a good time to consider your finances — and whether you are saving for a higher education. According to Sallie Mae, only 4 in 10 parents have started saving for their children’s higher education. However, 9 of 10 parents believe that their children will go on to receive a higher education. Sure, there are student loans, but if you start helping your child save now, they won’t be saddle with quite so much debt later.
Figuring out how much to save for college
One of the best things you can do is make college savings part of your overall financial plan. Sallie Mae offers a rather handy education investment calculator that can give you an idea of how much you should be saving, and helping you figure out what you can do to get on the right track.
Another thing you can do is get involved in putting money in a 529 plan or a Coverdell ESA. Both of these investment vehicles can help you get a jump start on growing college savings. I also like using Upromise. Here is what Upromise points out, in a press release, how many have been able to be helped with college savings through programs:
Members can receive money back while making eligible purchases such as gas and
groceries, dining out, and back-to-school supplies. Upromise members have
earned nearly $500 million in member rewards since 2001. Rewards accumulate in
a member’s Upromise account and can be transferred into a 529 college
savings plan account administered by Upromise Investments or used to repay
eligible Sallie Mae-serviced student loans. During the period April 2001 to
date, over $100 million in Upromise rewards have been transferred into 529 plan
accounts administered by Upromise Investments.
The Upromise account I use for my son has nearly $500 in it. I’m seriously considering putting it into a the 529 plan offered by Upromise. Now is a great time to start investing, since prices are so low. I could also add money beyond what’s in the Upromise account.
If you do use Upromise, though, it is important to be careful. Don’t run up an unmanageable credit card bill in the name of saving for college. Make sure you can pay off your credit card each month. I use my Upromise card for online shopping, trying to choose vendors that offer Upromise rewards so that I can double up on the card.
In the end, what’s important is that you come up with a plan to start saving for college. The early you start, the better.