How Much Should You Save for Your Kid’s College Fund?

July 15, 2022

Planning Ahead: How Much Should You Save for Your Child’s College Education?

It’s no secret that sending your child to college is expensive—and the costs continue to increase as the years go by. While the fees can be overwhelming, parents should not lose hope. As long as you plan effectively, raising a decent amount for your child’s college education fund is still possible. The more you save for your kid, the less student loan debt they’ll have to pay in the future.


Different Approaches to Saving

If you’re just starting out, one of the common questions you’d ask is, “How much should I save for my child’s college education?” There’s no specific answer to this, as each parent has different financial priorities like rent, utility bills, childcare, etc.

At Firefighters Credit Union, we suggest a few ways to help you raise enough money within the next few years. Here are some of the recommended approaches to building college education funds:


The 1/3 Rule

Paying for 100% of your child’s college costs is the ultimate dream of every parent. However, it can also be overwhelming, especially when fees double over the years. That’s why financial advisors suggest the 1/3 rule when raising funds for higher education.

With this approach, parents are only required to save up to one-third of the overall costs of a four-year undergraduate program. The rest of the fees can be filled in by past investments, scholarships, financial assistance, or your future income.


The 3x Rule

Based on past trends, tuition and boarding expenses for college education triple within a 17-year period—starting from birth until the enrollment period for college. Another thing to consider is that tuition inflation rates in public schools tend to be higher than those of private institutions. So, how much should you save up?

In the 3x rule, financial advisors suggest that your goal should be equal to the total college costs during the year your baby was born. This includes tuition, boarding, allowance, transportation, textbooks and supplies, and school activity fees. By doing this, your investment will be enough to cover at least a third of all the expenses when your child takes their undergraduate program in the future.


Proper Goal-Setting Is Key

Ultimately, the best savings goal you can set for your child’s college education fund is one you can stick to in the long run. While this is a huge financial undertaking and may require some scrimping, you must remember that you shouldn’t compromise other aspects of your life. Research, plan, and consult with professionals so you won’t have to worry about going over your budget.


Choose the Right Financial Institution for Your Savings

When it comes to saving for your child’s college education funds, Firefighters Credit Union in La Crosse, WI is here for you. With our high-yield savings products, you can earn competitive rates and access your hard-earned money when you need it. For more details, get in touch with us today.

Join Us

Become a Member - Click to Join - We're here for you.

Have a Money Question?

Ask the Money Man - click here