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When Should You Start Saving For College?

According to the Education Data Initiative, the average cost of college in the United States is $38,270 per year. If you have children, it can be stressful to think about how you’ll fund their higher education. You may be wondering when the best time to start saving for their college is. The short answer is that the sooner you can start saving, the better — and luckily, there are plenty of saving options available. 

In today’s blog, we’ll discuss the best time to start saving for your child’s college education and provide you with 4 college saving tips. We’ll also talk about a few different strategies for funding a college education.

When To Start Saving For College

While there’s no hard deadline on when you should start saving for college, the earlier you can start saving, the better. It’s never too early to take steps to fund your children’s college costs. And, the sooner you start saving, the more money you’ll have in the long run, thanks to interest. 

4 College Saving Tips

Saving money can seem like a daunting task, but it’s more achievable than you may think, especially with the right strategies. Here are 4 tips to help you start saving today!

Create a budget

It’s tough to save money if you don’t know where your money is going. Creating a budget that tracks your incoming and outgoing money helps you identify areas where you may need to limit spending. The Bank of the James budget planner allows you to organize your spending and use your budget to plan fixed expenses, variable expenses, investments, and more.

Automate your savings

Did you know that Bank of the James customers can set up a recurring transfer from your checking account to a savings account? Automating your savings is a great way to make sure money is moved over before you can spend it.

Avoid impulse buying

It’s all too easy to make a last-minute purchase that wasn’t necessary. Before making a purchase (especially a major one), consider asking yourself if you truly need the item. 

Review your spending habits

Consider creating a dedicated schedule for when you’ll look at your bank account and review your spending habits. Setting time aside to look at where your money is going can help you to make positive choices moving forward.

These are just a few tips to help set you on the right college savings path. Let the experts at Bank of the James help you start planning today.

3 Options For College Savings Plans

Even if you know that you should be saving for college, it can be difficult to decide how and where to save. Luckily, there are plenty of college savings plan options available. While we can’t advise you on where to invest your money, we can inform you of some different options to discuss with a financial advisor. Here are three popular college savings plan options:

529 Plan

529 savings plans are investment accounts that can be used for education savings and can be opened by almost anyone. These accounts work like Roth IRAs by investing after-tax contributions into investment portfolios. 529 proceeds can be used for educational expenses like tuition, room/board, books, and more. 

Roth IRA Account

A Roth IRA account can be used as a combination retirement and educational savings option, and Roth IRAs are tax-advantaged. This savings plan option allows you to invest in multiple stocks, bonds, mutual funds, or exchange-traded funds. Withdrawals from a Roth are also penalty-free for certain educational expenses. However, Roth IRA contributions do have annual maximums and specific income restrictions.

Regular Savings Account

Regular savings accounts provide you with investment flexibility, but they typically don’t provide the same interest that other savings plans may offer.

At Bank Of The James, We’re Here During Every Stage Of Your Financial Journey. 

At Bank Of The James, it’s our goal to provide you with knowledgeable financial advice during every stage of your life. Come in and talk with your local Bank of the James team about college savings plans – we’re happy to talk through any or all of the above strategies and help you get started preparing for the future today!

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