This post is sponsored by Upromise. All thoughts are 100% my own.
Saving for your children’s college education is so important and since the cost keeps increasing, saving for college now is a must. College tuition costs have nearly quadrupled in cost since the 1980’s! Can you believe that? Being able to fund their education is becoming more and more difficult so you have to start getting smarter about it. I wanted to put together a list of the ways that we have been saving for our girls’ future education. If you head over to Saving For College, you can actually calculate how much money it will cost your child to go to college when they are of age. For example, for Olivia (which is nearly three years old) to go to a private college now, it would cost about $134,600 and in 2033, it will cost around $323,900!!! That number is nauseating…….
so without further ado……
4 Ways to Save for Your Child’s College Education
1.) I was recently introduced to Upromise® by Sallie Mae® and I am so excited to share more details about it with you.
It’s free to join, and simple to use. Every time you shop online through Upromise.com, go out to eat at a Upromise partner restaurant, etc. you are able to earn cash back to use toward college (or anything you wish)! You can link your own personal credit cards that you already have or open the Upromise MasterCard®, which allows you to boost your earnings with even more cash back on eligible purchases. Here is the breakdown of earning with the Upromise MasterCard:
5% Cash back: Online shopping and online travel through Upromise.com, participating Upromise restaurants
2% Cash back: Department stores, movie theaters
1% Cash back: On all other card purchases
It’s so easy to use! helped us ace their savings by allowing us to save up for both Olivia and Ellie’s college funds while doing simple things like back to school shopping and going out for lunch! You can’t beat that!
There really is no down side to this and every little bit towards their future helps! I love that Upromise is making it easier for us to save for our children’s education while we are paying for things we would be doing otherwise!
2.) 529 Plans
A 529 plan allows you to save money specifically for college education funds. Generally, 529 plans have tax advantages, meaning that the earnings are not subjected to federal tax. Almost every state has their own individual state savings plan. Here in CT we have the CHET savings program, which is great! You can go to Saving for College for more information on the different state options available. Most of these plans only allow you to spend this money on a college education. If your child receives a scholarship and does not need the money, I believe you can then transfer it to a younger sibling. You can always take it out for something else but you would need to pay federal taxes and penalties on it.
 The availability of tax advantages or other benefits may be contingent on meeting other requirements. Please consult your financial, tax, or other advisors to learn more about how state-based benefits and limitations would apply to your specific circumstance. You may also contactt your home state’s 529 plan(s), or any other 529 plan, to learn more about those plans’ features, benefits and limitations.
3.) Coverdell ESA’s
These are very similar to 529 Plans in that they offer tax-free investment growth and tax-free withdrawals but here are the differences:
With Coverdell ESA’s, certain K-12 purchases are also considered qualified. This means that you are not limited to only spending the money you saved on college funds.
Coverdell ESAs have much lower maximum contribution limits per child
They are only available to families below a specified income level
You can read more about them here!
4.) Have them help you save!
I strongly believe in teaching children about money as soon as possible. My parents had me pay for some of my college tuition and I appreciated my degree so much more when I had to pay for it (that can be said of anything you work hard for in life). Now, I know your children may be young, but as they grow older and earn money from chores you can show them how to divide up the money that they earn into 3 categories:
Extracurricular Activities // Short-Term Goals // Long Term Goals (College)
Have your child create three little buckets for each. Even if they only earn a few hundred dollars for college this allows them to buy a book or two with their own hard earned money. It will give them a sense of accomplishment and teach them how to budget in the future.