Written by Barbara Heller, Associate Financial Planner

The rising costs of college make the task of saving for children’s education a daunting task. Many parents become overwhelmed with the worry that small amounts of savings won’t come close to being enough for future expenses. While these are valid concerns, the old advice of saving early and taking advantage of compounding still holds true (no matter how small the savings may be). Just take a look at the numbers:

• Saving $100 per month and earning 8% average return over 18 years: $48,009

• Saving $200 per month and earning 8% average return over 9 years: $31,486

In addition to shouldering some of the savings burden themselves, parents should also consider getting creative. One way to do this is by having a discussion with family members about helping save for the child’s education.

1. Ask for 529 contributions in lieu of gifts (at least while the kids are young enough not to know the difference). For example, for my nephews’ birthdays and Christmas (ages 4 and 2), I give them a small gift but the majority of their gift is a check to their respective 529 plans (education accounts). They have so many toys already so I feel good knowing that I am helping contribute to their future education (rather than their overflowing toy boxes).

2. Encourage family members to use online savings websites such as www.upromise.com and www.babymint.com to earn money for college while doing their regular shopping. (See previous blog article titled “Shop…and Save for College!” http://www.claytonfsiblog.com/shop-for-college/)

3. Recruit your kids to help save for their own college. Once the kids are old enough to understand some basics about money, start talking to them about the importance of college and also about the costs. Brainstorm with them about ways they can help with future college costs:

• Have them save a portion of their allowance for college

• Help them research possible scholarships online and look at the requirements. What things could they start doing now to increase their chances for scholarships in the future?

The main goal is to start saving early and make this process as low stress as possible. By recruiting family members to help with the task it can relieve some pressure but also make it a group affair that can be fun. Also, remember to celebrate your results. Recognize the effort your child and family members have put in to help and show your appreciation for those efforts.

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